Some area Realtors estimate that as many as 60 percent of prospective buyers who attend Silicon Valley open houses hold citizenship in countries other than America. Specifically how many of them end up buying homes here is not known, but given the speed at which area homes leave the market and the 10 percent +/- over asking price being paid for the homes, the number is likely significant. There’s a strong trend here for buyers to pay all cash for homes. This further indicates a large proportion of sales from foreign buyers, who find it much easier to pay cash than to work through the mortgage process: these buyers don’t have verifiable credit histories, Social Security numbers and other documentation required by most lenders.
Where are the buyers coming from?
According to a recent survey of Realtors by the National Board of Realtors (NBR), the majority of international home-buying money that comes to the U.S. originates in Canada, China (PRC, Hong Kong, Taiwan), Mexico, India and the United Kingdom.
Silicon Valley seems to have a much larger percentage of foreign home buyers than does the country as a whole. The NBR survey showed that foreign home buyers accounted for 8 percent of residential home sales in the U.S. between April 2013 and March 2014. Ask any Realtor here, and they’ll tell you our percentage is much higher.
Two groups of foreign buyers
In total, international home buyers spent $92.2 billion on U.S. residential real estate in the one-year period noted above. Those buyers are fairly evenly divided into two groups:
1. Non-resident foreigners who do not live in the United States. They buy homes as investments, vacation properties or as temporary living arrangements of six months or less.
2. Resident foreigners who have lived in the U.S. for less than two years or have temporary six-month visas and are here for work, educational or other reasons.
During the period studied by the NBR, four U.S. states accounted for 55 percent of the total reported purchases of residential real estate by foreign buyers: Florida, California, Texas and Arizona.
Florida took 23 percent of these purchases, California 14 percent, Texas 12 percent, and Arizona 6 percent. Other states filled in the remainder. Cities where the largest amount of international money was spent include Los Angeles, Miami, Las Vegas, Orlando and New York City.
Another interesting statistic about the international buyers market is the price they pay for homes compared to what domestic home buyers are paying. The median purchase price of U.S. residential properties by foreign buyers so far in 2014 is $268,000. For domestic buyers, it’s $200,000. International buyers have consistently outspent domestic buyers by similar percentages since 2009.
Both foreign and domestic buyers can find the ideal home to suit their needs here in Silicon Valley. My job is to provide thorough and accurate guidance and to make the buying process as smooth and rewarding as possible. Whatever type of home you’re looking for, I’ll work hard to find it for you. Call (650) 947-2942 any time.