07/10/07 Florida home sales to international buyers decrease 65 percent
ORLANDO, Fla. – July 10, 2007 – In 2006, home sales to international buyers fell about 65 percent compared to 2005 numbers, according to a Florida study conducted by the National Association of Realtors (NAR). Analysts blame “the exorbitant rise in property/hazard insurance costs and equally dramatic rise in property taxes” on top of higher mortgage rates during the prime homebuying season.
Tougher border security laws may also have affected long-term visitors’ interest in real estate since it’s more difficult for anyone who wishes to spend an entire season in Florida. A June 2007 study by Florida TaxWatch estimates that increased oversight and stricter rules governing international visitors have negatively impacted Florida’s economy by over $50 billion.
In 2005, NAR’s Research Division, in concert with the Florida Association of Realtors (FAR), studied the extent of homebuying activity in Florida by foreigners in its first international study. In 2005, during the height of the real estate boom, the empirical study was the first of its kind to help quantify anecdotal stories of a foreign homebuyer presence in Florida. At that time, about 15 percent of all home transactions in the state between May 2004 and May 2005 involved a buyer from a foreign country.
NAR Research again partnered with FAR and conducted another survey of Florida Realtors about foreign home purchase transactions in the state. The survey was conducted in February/March of 2007. Results were based on responses from Florida Realtors who had at least one international client. The questions related to the then recent 12-month time period – essentially most of 2006.
In 2006, the Florida housing market underwent a housing market recession. Existing-home sales in Florida declined 27.6 percent in 2006 from the previous year. Purchases by international buyers fell drastically more with NAR estimating international sales having declined to 28,900 from 81,900, a 65 percent decline from 2005 to 2006.
The principal reasons for the decline in sales and accompanying price weakness were higher mortgage rates during the prime homebuying season – spring and summer of 2006 – in combination with the steep rise in property/hazard insurance costs and dramatic rise in property taxes for second-homeowners who cannot claim homestead exemption.
Even with the decline, however, foreign home buyingactivity still accounted for an important share of home sales in Florida – 7.3 percent. Among the Realtors who participated in NAR’s survey, 65 percent reported that they brokered at least one home sale transaction with an international buyer – a decrease from the 87 percent who had at least one international transaction in the 2005 survey.
Nearly half (48 percent) of those Realtors who brokered foreign-buyer purchases noted that one to four of all their transactions were with international clients. For almost 8 percent of Realtors, more than half of their home sales transactions in 2006 were with international clients. Essentially, that means that for 12,900 active Florida Realtors the majority of their business was with foreign buyers.
The free 14-page report is available online at floridarealtors.org (http://www.floridarealtors.org/LegislativeCenter/Research/index.cfm).
It also includes information on international homebuyers’ countries of origin, the types of homes purchased, prices of homes, financing decisions, reasons for purchase, state areas popular with international buyer, and methods of payment.
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