Canada Comes to the Rescue
Canada is more than just a friendly neighbor. They are now proving to be a valuable friend of the U.S. housing market.
A new report by the National Association of Realtors® shows that Canadians outran Chinese and Mexican buyers in buying homes in the U.S. And they bought more property on American soil than in any year since 2007.
Foreigners poured $82.5 billion into the housing market in the year ended March 31, according to NAR. That’s a big jump from $66.4 billion the previous year. Canadians accounted for 24 percent of the total sales, followed by Chinese buyers at 11 percent and Mexicans at 8 percent. Low interest rates, sinking prices and an increasing number of foreclosures are serving as baits for foreign buyers. Arizona, Florida, Texas and California are the favorite destinations.
“Today’s advantageous market conditions have drawn more and more foreign buyers to the U.S. in recent years, signalling how desirable and profitable owning property in this country can be,” NAR president Moe Veissi told The Globe and Mail.
Foreigners make up 10 percent of home sales, but with a struggling domestic economy, they are among the fastest growing segments in the market, the paper reported. And they are also more desirable.
The NAR survey found that at a time when domestic buyers are struggling with depleting disposable income, strict lending practices and bad credit, foreign buyers are paying cash and investing in more expensive homes. According to the survey, the average price paid by an international buyer was $400,000 while the average for domestic buyers was $212,000.
“The international client is typically wealthier than the domestic buyer and is looking for a property in a specialized niche, for example, a larger property suitable for multigenerational living, or a property that establishes the individual’s presence and standing in the community,” the survey said.
Home Supply Drops as Prices Climb
Here’s some good news. New data shows that homes are selling at a faster pace, although many sellers continue to sit on their properties waiting for prices to climb further.
In June, the number of homes listed for sale plummeted 20.1 percent while sellers upped their asking price for the fourth consecutive month. That’s a sign that the housing market is waking up from its deep slumber.
In May, the median price of homes climbed 1.9 percent from the previous month to $194,400 – the highest in more than two years.
“You’re seeing sellers sit on the sidelines in certain markets where there are homeowners with little to no equity in their homes. They aren’t bringing their home to market,” Steve Berkowitz, CEO of Realtor.com, said according to Reuters.
That decrease in supply has helped arrest any more price fall despite the uncertainty in the economy and a schizophrenic market. Spring is a busy time for the housing market, but the number of homes for sale were down in May in most of the 146 markets. In May, the median time properties waited to be sold dropped 9.8 percent.
Will Echo Boomers Come to the Housing Market’s Rescue?
Yes, says the National Association of Realtors®. The NAR says about 62 million of that segment of population, roughly between the ages of 17 and 31, will influence the housing market. Young buyers currently make 31 percent of sales.
“Clearly it’s a significant demographic group,” Charlie Young, president and CEO of ERA Real Estate told U.S. News. “With about 5 million turning 21 every year, they’re going to be driving the first-time homebuyer market for years to come.”
But would that really happen?
Mounting student loan debts, a struggling economy and strict lending practices could upset Echo Boomers potential in the short term. But once the economy improves, this population segment will be a force to reckon with, experts said.