REAL Exclusive Magazine Patricia Tan - Perspectives

How Foreign Buyers Impact Our Real Estate Market

By Patricia Tan

Real estate prices are always a popular topic of conversation, and recent press coverage has given Florida home owners a lot to talk about. Reports from around the state tell of rising prices, falling inventory levels and increasing numbers of closed sales. Comments like “Reminiscent of our market boom in the early 2000’s” and “Houses selling as fast as they did in 2005” are commonplace.

I thought it would be interesting to look back and put today’s property values in perspective.

The chart below shows the median home sales price in Florida over the past 10 years. You will see that home prices rose steadily from 2003 to 2006, peaking at $257,800 in June 2006. They remained relatively steady over the next year, a period when homes stayed on the market much longer before selling, as there were so few buyers. When it became apparent that there was an oversupply of homes, prices started to slide and remained in that downward trend for the next few years. Looking back now, we can see that the market bottomed in January of 2011, when the median home price was $122,200 – less than half of the peak price of $257,800. When people said properties were “selling at half price”, it was true.

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Is it too late to buy a bargain priced home?

While we have seen a strong upward trend in prices over the past eighteen months, today’s median price is $177,500. That’s still 32% lower than peak prices in 2006 and bodes well for further appreciation in values. We still have homes available that represent excellent value for money.

How much of the market recovery can be attributed to the influx of foreign buyers?

Over the last two years Florida has been the number one state for international real estate investment. Statistics from the National Association of Realtors® show that 23% of all overseas buyers purchase property in Florida. The median home price for international buyers is substantially higher than that of domestic purchasers, so their activity has spurred our median price higher. Almost two thirds of international buyers pay cash for their properties. This has been particularly important in recent years when mortgage finance may not have been readily available.

Real estate purchases made by overseas investors also have knock-on effects on our general economy. They contribute to increases in tourism and global trade, which in turn stimulate our local market providing jobs and economic stability.

The chart below shows the origin of largest groups of international buyers. Some of these may be surprising to you. Here on the Gulf Coast we are used to hearing Canadian and British accents but safety and security issues in Mexico have driven capital from Central America in our direction too. Affluent Chinese families are taking advantage of our schools, colleges and sports instruction provided by organizations such as IMG Academy. Economic growth in India has led to more overseas investment from that country too.

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^[3]Patricia Tan was born in England, and her career in international sales and marketing led her to live and work in many countries around the world before moving to Sarasota in 1997. Patricia is a Certified International Property Specialist (CIPS), Graduate Realtor Institute (GRI), and Transnational Referral Certified (TRC). She is involved in global activities of the Sarasota, Florida and National Association of Realtors, and currently serves as NAR President’s Liaison to U.K. Her real estate business operates from Coldwell Banker on St Armands Key, where her focus is to bring international buyers to the local market. She regularly makes marketing trips to Canada, Asia and Europe, to promote Florida’s Gulf Coast and the Sarasota area in particular. Patricia may be reached at 941-504-9232 or Pat@PatriciaTan.com ^[4].

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