29 September 2009
Property investors are not rushing in to buy property in USA despite the fact that USA property values have tumbled over the past couple of years, data from the National Association of Realtors (NAR) shows.
Most USA realtors report that there has been a rise in the number of investors taking advantage of cheap USA property prices, by investing in USA homes at bargain basement prices, particularly in the sunshine state of Florida, the most popular state among Brits buying property in USA. But the NAR’s data shows otherwise.
The NAR report shows that USA property sales to foreign buyers fell 9.4% in the year ending in May to 154,000.
A lack of mortgage liquidity has been cited as one of the main reasons for the low demand. Of those who did buy property in USA, almost 50% paid cash for their home due to the stringent mortgage lending conditions, according to the report.
Madison Hildebrand, a Coldwell Banker real estate agent in Malibu, California, commented: “It's at least three times more difficult for foreign buyers to get financing than it is for US citizens who have all the right documentation and good credit.”
The NAR report says that just over 30% of al foreign USA property buyers use their dwelling as a holiday home and the banks view this as higher risk, according to Maria McKee, chairwoman of the Orlando International Real Estate Council.
She said: “Banks are thinking people will walk away from their vacation home before they walk away from their primary residence.
“We'll continue to see interest from foreign investors, but a lot of them will be cash buyers.”
The largest groups of foreign buyers are from Canada and the UK and it is these buyers who have left the market during the global downturn, But the NAR reports increasing interest from property investors in Mexico and India.
See Also: Marc Da-Silva (269), USA (55), Overseas property investment news (34)
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