Strong dol­lar curbs in­ter­na­tional buy­ers of US homes

Financial Mirror (Cyprus) - - FRONT PAGE -

In the first four months of 2014, 2.5% of all homes sold in the United States were sold to for­eign buy­ers. In the same pe­riod in 2015, that per­cent­age dropped to 2.0%, down by nearly a fifth. To­tal U.S. home sales rose by 9% year over year for the same pe­riod.

Ac­cord­ing to a re­port in June from the Na­tional As­so­ci­a­tion of Real­tors (NAR), three-quar­ters of real es­tate agents re­ported that for­eign ex­change rates have a mod­er­ate to very sig­nif­i­cant ef­fect on their for­eign buy­ers.

Five coun­tries ac­count for 51% of all home pur­chases by for­eign buy­ers: Canada, China (in­clud­ing Hong Kong and Tai­wan), Mexico, In­dia and the United King­dom. And just four states ac­count for half of all in­ter­na­tional sales: Florida, Cal­i­for­nia, Texas and Ari­zona. More than 55% of in­ter­na­tional sales are all cash. Ac­cord­ing to the NAR re­port, unit sales of homes to for­eign­ers de­clined by 10% in the 12 months be­tween April 2014 and March 2015.

Eu­ro­zone coun­tries ex­pe­ri­enced the largest cur­rency de­cline com­pared with the dol­lar, down 23% in the four­month pe­riod from Jan­uary through April 2015, com­pared with the same pe­riod in 2014. Sales to eu­ro­zone buy­ers dropped 32%. The Aus­tralian dol­lar fell 16% year over year and U.S. home sales to Aus­tralian buy­ers fell 24%. The Bri­tish pound lost 10% com­pared with the green­back and pur­chases by U.K. buy­ers fell by 29%.

In each of the past three years, Chi­nese buy­ers have dom­i­nated the in­ter­na­tional sales num­bers. Chi­nese buy­ers pur­chase homes val­ued at an es­ti­mated $12.8 bln in 2013, $22.0 bln in 2014 and a pro­jected $28.6 bln in 2015. The Hong Kong dol­lar ac­tu­ally has ap­pre­ci­ated against the U.S. dol­lar, and the Chi­nese yuan had changed lit­tle un­til eq­uity prices be­gan to col­lapse last month.

Hard­est hit by the strong dol­lar are Cana­di­ans, who have seen the loony de­pre­ci­ate by 12% and who have cut their home buy­ing in the United States by 34%. Al­most half of sales to Cana­di­ans were lo­cated in the Mi­ami-Fort Laud­erdale-Palm Beach area, where home prices have risen as much as 8% year over year, ac­cord­ing to CoreLogic. Cou­pled with a de­pre­ci­at­ing cur­rency, the cost of house in south Florida jumped from 20% to 25% be­tween the first four months of 2014 and the same pe­riod this year.

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