Your local real estate market could be influenced by a surprising factor: international hot spots of conflict and instability. Though the U.S. market has experienced a steady increase in sales to foreign buyers over the last few years, political conflicts and unreliable markets in other countries have encouraged even more overseas investors to funnel money into local real estate.
Despite the fact the return on investment is often considered low by foreign buyer standards, U.S. real estate is regarded as a safe and stable opportunity to move money out of countries facing increased economic and geopolitical challenges. Favorable exchange rates, affordable home prices and rising affluence abroad are also key factors that contribute to this trend.
A report released by the National Association of REALTORS® (NAR) in March 2014, found that foreign buyers accounted for 7 percent of total market sales, a number which continues to climb. Buying everything from commercial properties to luxury condominiums to housing developments, overseas clients aren’t a new trend in the history of U.S. real estate. But what does it mean for your local market?
The NAR study also shows that the average purchase price by international clients is higher than that of domestic clients, which could drive housing prices up over time. More specifically, the Chicagoland area is gradually becoming a region favored by international buyers, and along with an overall market recovery, we may anticipate increased market competition in the future. Though favorable for current property owners, this can make it more difficult for first-time buyers to get into the market.