Last week the National Association of Realtors – Together with the Miami Association of Realtors, hosted the annual International Real Estate Congress in Miami Florida. The event was attended by hundreds of real estate professionals from as far away as China, Russia, France, Spain and Latin Americas Brazil, Argentina and Mexico.
The conference lasted two days and included as well many local, national and international industry economists, practitioners, industry developers, builders, banking financiers and real estate lawyers. They were all informed of what to expect from the United States, housing market in the coming year with all of the doom and gloom predictions. Lawrence Yun, National Association of Realtor’s Chief Economist provided a detailed presentation showed current housing trends, historical statistics and market forces at work at both the local, national and international levels that lasted over one hour.
Mr. Yun stated that United States home sales are now running parallel with sales levels from 1998 even though there are approximately three million more people added to the U.S. population every year, creating an enormous pent-up demand yet to be included to the marketplace.
He also stated that over 40 million multi-generational family members and friends are now living in the same household because of the tough economic times. Many generation “X” individuals are moving back in with parents or grandparents, or multiple families are sharing a single residence. All those people typically would be buying homes in normal market conditions and now they can’t.
However, Florida has the benefit of having foreign buyers purchasing American real estate at a very interesting level. In 2011 foreigners account for the following real estate purchases in the state of Florida:
41% of the Florida purchases came from Canada and Mexico
26% from Latin America
23% from Western Europe
10% from Other Nations
Mr. Yun also pointed out that new start-up home prices are an all-time low not seen since the end of World War II. That fact alone indicates that the U.S. market will likely be experiencing a housing shortage during the coming years. When the economy turns and people start getting jobs and buying homes again at normal price levels the prices will begin to climb up again. Hopefully California with 12% of foreign real estate buyers will benefit with the trend being second after Florida followed by 9% in Texas and 6% in Arizona.
What is the reason that foreigners do not see it that way and believe in our market more than we do? That is the question. My consensus is that U.S real estate is still a secure investment. Compared to most politically and socially volatile third world nations, investing in our real estate is without a doubt a secure calculated risk.
U.S. real estate is a profitable investment. American real estate has been for us turkish citizenship by investment the foundation of the “American Dream of prosperity”. We have more immigrants from around the world than any other nation on earth wanting to be a part of that dream. Therefore, in a good economy and even in a hard one like the one we are experiencing now, it makes good sense to by low and sell high when things get better. And better I believe they will.
Finally, American real estate is a desirable location because it is mostly a safe place to live. People will pay more rent or a higher sale price to reside in a safe area where to bring up a family. Good schools and prosperous clean neighborhoods. The old real estate business motto “location, location, location” really applies here. The above NAR figures represent foreigners purchasing real estate in the state of Florida. According to the latest NAR figures, the influx of foreign capital nationwide goes as follows;
North America: 31%
Central America: 2%
South America: 11%
Middle East: 3%
Personally, as a professional real estate investment consultant, the trust of foreigners investing in our patrimony speaks volumes. We may be on the brink of a double dip recession, and not happy at all with our government policies and/or actions, however, the grass is always greener on the other side only when we forget to fertilize our own grass.
For those foreigners investing $82 Billion dollars in our $1.07 Trillion existing U.S. home market is a show of confidence we must take into account very seriously. For them, we are the greener grass. In my humble opinion, it is time to stop complaining and begin to work hard on getting our nation back in track and keep the American Dream alive.