Indian buyers accounted for nearly $ 3.5 billion of the $ 68.5 billion that foreigners spent on purchasing homes in the United States during the 12 months ending March 31, according to the National Association of Realtors.
Although the falling rupee appears to have dampened some enthusiasm for foreign properties, buyers from India once again made the Top Five foreign customers who have historically accounted for a bulk of realty purchases in the United States. Canada, China, Mexico are the top three countries buying into the United States, followed by India and the United Kingdom.
In the latest NAR survey, these five countries accounted for approximately 53 per cent of the reported international transactions. Buyers from 68 countries across the world purchased homes in the US, where it is relatively easy for foreign buyers to purchase homes.
While Indian buying peaked in 2009 when they accounted for 9 per cent of all foreign purchases, Chinese, who accounted for only 5 per cent that year, have surged ahead to buy 18 per cent of all realty sold to foreigners during the year ending March 2013. At a median price of $425,000, the Chinese are also buying more expensive homes than other foreign buyers, who spent a median of nearly $276,000 on US homes.
The median price of homes bought by Indians was $ 300,000 (about Rs 1.8 crores at current value, but closer to Rs 1.5 crores in 2012 when the rupee was around 50 to the dollar). It was lower than the median price of Chinese homes but higher than what Britons ($ 250,000), Canadians ($ 183,000) and Mexicans ($ 156,250) paid for their homes. The median price of homes bought by Americans is only around $ 220,000, attesting to the wealthy Chinese and Indian footprints in the U.S market.
According to the NAR report, international non-resident clients are likely to be substantially wealthier than the median domestic buyer, and are usually looking for a trophy property abroad after having met essential living needs in their home country.
The survey shows that among the reported destination states for buyers from India, the top states were California, Tennessee, Connecticut, and New Jersey. According to information from realtor.com, as of March 2013, the five markets of greatest interest to potential Indian buyers are Los Angeles, Orlando, Chicago, Dallas, and Houston. Indian buyers include those on temporary guest worker visas such as H1-B, but exclude Indian-Americans or American citizens of Indian origin.
Based on data from the survey, the bulk of properties purchased by Indian buyers were in the suburban area. Approximately 90 per cent of reported purchases were detached single-family properties and 7 per cent were commercial properties. Approximately 21 per cent of the reported purchases were all-cash.
According to the NAR, international purchasers typically buy detached single-family homes, which they intend to use for primary residence and for longer than six months. International students enrolled in US colleges and universities (usually funded by wealthy parents), recent guest workers and potential immigrants intending to settle down in the U.S, and professional and managerial employees of businesses and institutions who are in the US on a temporary but extended visit may plan on using the property year round for primary residence.
Since non-resident foreigners are limited to 6-month stays in the US, such international buyers generally expect to use the property for vacation/rental purposes and as an investment, the NAR report says. About 42 per cent of reported international transactions were intended for primary residences.