Foreign buyers drawn to Florida
Jul 15, 2011
The following article was published in the Sarasota Herald-Tribune on July 15, 2011:
Florida buyers drawn to Florida
By Cynthia Anderson
Two weeks before Howard McIntyre bought his property in Bradenton’s Heritage Harbour three years ago, he began having doubts about owning a place so far from his Ontario home.
“I was worried about how I’d maintain it, how I would take care of the lawn, what if something broke down,” he said.
A friend gave him advice he hasn’t forgotten. “He said, ‘Howard, if a hundred thousand other Canadians are doing it, it can’t be too hard.’ And he was right.”
McIntyre and his wife, Dian, bought that home, and in 2010 and 2011 they bought four condos — all in Heritage Harbour, each for $100,000 or less.
“We really liked it there, and I sensed an opportunity,” he said. The Canadian dollar was (and still is) valued higher than the U.S. dollar, the condos were “well situated and very well built,” and McIntyre believed that the current lending market meant that many people would be looking to rent rather than to buy.
He and his family continue to vacation in the original home. Several of the McIntyres’ friends and acquaintances also have purchased properties in the area.
The McIntyres and their fellow Canadians are not alone. Based on figures released last month by the National Association of Realtors (NAR), the U.S. — and Florida in particular — remain highly desirable to international buyers. Indeed, real estate purchases by foreigners surged by $16 billion for the year ending March 2011, one of the largest increases in recent years.
The NAR’s 2011 Profile of International Home Buying Activity reports that residential international sales totaled $82 billion last year, up from $66 billion in 2010.
The sales were split evenly between recent immigrants and non-resident foreigners. International sales comprised nearly 8 percent of the combined total for international and domestic purchases of $1.07 trillion.
Florida accounted for 31 percent of the international transactions last year — the highest of any state. That figure is all the more notable given that Florida generated 10 percent of the total in 2007 and 9 percent in 2008.
Historically, foreign buyers have been attracted to U.S. property ownership for a variety of reasons, including relative value and investment potential. The combined weakening of the U.S. dollar and the real estate market — with prices slashed in some cases to half of what they were five years ago — has enhanced that desirability.
In Sarasota, some Realtors have specialized their practices to focus on an international clientele. At Prudential Palms Realty, for instance, about 75 percent of Carla Rayman’s business is international. And Rayman sees the market rising.
“Prices of Florida real estate, along with the devalued U.S. currency, mean that more international buyers can realize that holiday home and even pay cash,” she said.
Rayman’s sales figures increased from 2009 to 2010, and again from 2010 to 2011. “We’re still feeling it and seeing it very strongly, even now that the season is over,” she said. Many of Rayman’s current clients are repeat buyers who previously purchased vacation properties through her and are now looking for investments.
At the Lakewood Ranch branch of Michael Saunders & Company, Bill Weed cultivates the Canadian market.
“I really enjoy them,” Weed said. “They love it here and they’re easy to deal with.”
Last winter, Weed traveled to Toronto to meet with a group of prospective buyers. “I showed them pictures of beaches and palm trees. That’s about all it took.”
Weed, who has closed more than a dozen deals this year for Canadians, said his clients are purchasing both owner-occupied second homes and investment properties.
“Sometimes they buy both,” he said. “The prices are so low, why not? They didn’t get hurt like we did (by the recession), so they see opportunity and they have the money.”
Weed recounts a recent visit to the home of a Canadian couple who purchased in Bradenton. They had coffee together, and then the woman went shopping while the man went on a casual outing with Weed to look at properties. Later they reconvened at the house. The wife showed off her new purse. “That’s nice,” the husband said. “Look at the two condos I just bought with Bill.”
The downside of the international perception of Florida as a bargain-hunters’ delight is that some prospective buyers have unrealistic expectations of the relatively high-end market in Sarasota, said Realtor Pat Thiessen, who owns Crown Properties Group.
“What you might get in one (Florida) county, you’re probably not going to get here,” she said. “People are extrapolating from what they’re reading, but Sarasota is not a typical market. I have people calling who want a three-bedroom condo on the beach for $100,000. That’s not going to happen in Sarasota.”
Nationwide, international buyers came from 70 countries, with Canada ranked first (23 percent), followed by China (9 percent). Mexico, the U.K. and India tied for third. The average price paid by international purchasers was $315,000, compared with a U.S. average of $218,000.
Florida was most popular among Canadians, Europeans and South Americans. In Sarasota, Thiessen said many of her buyers are from England and the European continent. She expects the number of British buyers to rise if the pound continues to strengthen, and, relatively, the number of European buyers to decrease if the euro weakens.
Most of Thiessen’s buyers also pay cash — “more than 99 percent,” she said, even in the $3 million to 4 million range. (According to NAR data, 62 percent of the international purchases were paid for in cash — significantly higher than all-cash purchases by domestic buyers.)
“My buyers come for the beaches, or golf, or both,” she said. “They like the lifestyle, that it’s easy to get around and the weather overall is good. They like that it’s upscale. Sarasota is the cultural capital of Florida — opera, ballet, theater and professional sports all nearby. They value that.”
Right now, Thiessen’s clients also like the prices. “They think they’re just fabulous buys,” she said. “We have Swiss friends in The Oaks who thought their house, at $1.1 million, was an absolute steal compared with something similar in Switzerland. The only problem is that (because of visa restrictions) they can only be here four months of the year,” Thiessen said. The couple also owns homes in Switzerland and Chile.
Not all international buyers are as affluent as Thiessen’s. Weed said his clients typically seek properties under $300,000.
“They’re not buying the million-dollar-plus stuff,” he said. “Especially if they’re looking for an investment or to rent the place, the initial amount has to be low for them to get a good return.”
Some local Realtors have dedicated pages on the websites to foreign clients. Realtor John Allen, of Allen Real Estate Services, offers online advice to prospective international buyers.
For example: Factor in the costs of irrigation systems and hurricane shutters in negotiating your price; consider the savings of living on mainland Sarasota rather than on a barrier island; include maintenance fees, taxes and homeowner’s insurance in your budget; review the pros and cons of owning a pool, he says.
Foreign buyers do face challenges in financing would-be purchases, with NAR figures showing that 32 percent encountered hurdles that killed the transaction. Lenders “make it brutally tough and at very high rates,” said McIntyre of the banks’ dealings with international clients. He wound up arranging for financing in Canada.
Despite the financing glitches, McIntyre is glad to be a Floridian. “We love it,” he said. “My wife says she feels more relaxed after 12 hours in her Florida home than after three days in other exotic locations. It’s a very laidback lifestyle.”
And even if Florida real estate is not presently an investment guarantee, Thiessen believes that international buyers will keep coming. “They do like it here,” she said. “And at least when they purchase a home, they’re getting something tangible.”
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