Are Foreign Buyers Afraid of Boston Real Estate?
Are foreign buyers turning away from Boston real estate?
Nationally, according to a report released last week by the National Association of Realtors , that could be the case. For the 12 months ending May 2008, only 26% of 4,000 American real estate agents surveyed across the country had at least one foreign client. In 2007, in a similar survey, the proportion was much higher–32%. In both years, about half of the clients eventually bought a home — usually as a vacation home or investment. Those that didn’t buy, according to agents’ reports, were discouraged by the cost of the property (54%), immigration laws that prevent foreign nationals from living in the United States year-round (27.4%), and property taxes (24.2%).
The Wall Street Journal recently ran a piece on this subject advising sellers who hope to attract foreign buyers to put more thought into pricing homes. The WSJ urges sellers to include more market data in listings, including recent price trends in a zip code and/or rental receipts for a property in the last few years.
”Even though many buyers are well off and can pay cash for a home,” writes June Fletcher in the WSJ’s House Talk, “they’re typically not planning to spend a fortune (the median is $297,400). And many plan to rent it out at least for part of the year, due to immigration restrictions. On average, foreigners plan to spend 2.6 months on average at their overseas abodes.”
Here on the local front, housing prices in downtown Boston are indeed high, and they don’t appear to be dropping, either. The latest reports actually show some minimal increases in Boston housing prices in the most recent months. While there’s no firm data on how many foreigners are buying residential real estate in the city, anecdotally at least, several realtors have told me that a significant percentage of their buyers come from abroad. Many have a local tie of some sort, and many more are attracted by the recent fall of the dollar against other currencies such as the Euro. Compared to many European locales, Boston real estate remains competitive and might even be considered a bargain.
Boston also has an advantage among foreign buyers because of the importance of the academic and high-tech sectors in the area. Some of the new buyers coming into town have ties to one of the universities, or are perhaps sending children to attend a local college. Others are working in the computer, scientific or medical fields and spend at least part of the year here for that reason. Foreigners who buy in Boston are not generally buying a vacation home.
Given all this, odds are that Boston will continue to attract its particular brand of foreign buyer, even while shakier markets like Phoenix, Florida and Nevada experience decreased interest.
August 13th, 2008 at 9:06 am
Interesting post. I would think this would be the opposite because of the weakness of our dollar. Also, we interact with foreign buyers all day long. Maybe this survey was too broad and not subject to urban agents…where most of these buyers are buying?