Property sales to foreign buyers dropped 9.4% in the year ending in May to 154,000, according to the NAR report.
Lack of finance and banks continuing to be tight about credit could be one reason, the report says. Of those who did purchase, almost half paid cash for their property because securing a mortgage was more difficult than before, according to the report.
‘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,’ said Madison Hildebrand, a Coldwell Banker real estate agent in Malibu, California.
The NAR report says more than 30% of international property buyers use their US property as a holiday home and that triggers banks to assume they pose a higher risk, according to Maria McKee, chairwoman of the Orlando International Real Estate Council.
‘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,’ she explained.
But the NAR expects the situation to change as the credit market begins to turn the tide.
‘Stock market gains and improving bank balance sheets will permit a greater amount of lending for second home purchases,’ said NAR chief economist Lawrence Yun, adding that expanding foreign economies and favorable exchange rates will give international buyers more purchasing power.
American real estate has always been a good long term investment.
It's relatively easy for internationals to hold real estate in the US than in other countries where there are more caveats,’ he added.
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.
California is also proving to be popular, especially with property investors from India.
