Rising prices, disappearing bargains and economic troubles at home are quickly thinning the ranks of foreign property buyers. Who, just a few months ago, were being hailed as a major force in Florida markets and other resort destinations.
Foreign nationals spent about $82.5 billion in the 12-month period ending in March 2012-up about 24 percent from the $66 billion they spent the year before-but only 9 percent of all residential real estate sales come from international buyers, according to a report from the National Association of Realtors released six months ago.
However, every month since then with the exception of May, NAR reported foreign nationals have purchased only 2 percent of all homes sold, the same level as in most of 2010 when the foreign buyer boomlet began.
In July, the real estate site Trulia reported a decline in the international share of overall online house hunters in the second quarter. From April 1 to June 30 the share of foreign searches on Trulia fell nearly 10 percent year over year in the second quarter, with the fastest appreciating markets seeing the biggest declines in foreign interest.
“Foreigners attracted to real estate bargains get turned off when prices increase,” said Jed Kolko, Trulia’s chief economist. “Investors want to buy when prices are at their bottom, but they’ll start to lose interest when prices rise 15 percent, as they have in Miami and Phoenix. Demand by people looking to scoop up bargains can dry up quickly when prices rise.”
Six of the 10 metro areas with the highest share of searches from abroad were in Florida — a warm weather state that saw huge price declines during the downturn. Nonetheless, recent price increases in metros like Miami and Cape Coral-Fort Myers mean some of these metros have seen less interest from overseas house hunters in the past year, Trulia said.
However, a new survey conducted by the National Association of Realtors found that number of international buyers in the Sunshine State is on the decline. From June 2011 to June 2012, 19 percent of Florida home sales went to nonresident foreigners, down from 25 percent in the previous 12 month period.
That’s especially bad news for Florida sellers. International buyers paid a median price of $194,700, higher than the Florida median price of $125,100 and U.S. median price of $167,758, and some 82 percent of foreign sales were all cash. The largest share of foreign buyers were Canadian, 31 percent, and gravitated toward the lower-priced homes. Both European and Latin American buyers bought homes in the higher price range, according to a study by the Florida Realtors.