Foreign investors eager to buy U.S. real estate
Weak dollar and low mortgage interest rates make homes, businesses more attractive.
There's a new group of buyers in the U.S. real estate market: foreigners.
A weak dollar and relatively low mortgage rates have turned houses and other real property into the investment of choice for a growing number of people from other countries. Some see real estate as a better way to earn money than stocks or other securities, while others are interested in using the properties themselves.
Ana McColgan, of Donegal, Ireland, is in the market for a three-bedroom home in the metro Orlando area.
"We keep coming over there anyway, so I'd rather have it than pay for hotel rooms," said McColgan, who's married with two children. "Maybe we could rent it out to offset the cost of having it."
Lowerys USA, which specializes in helping British buyers find properties in central Florida, saw sales increase threefold last year to $15 million.
"There has been a tremendous sales binge going on here for about 15 months now," co-owner Roy Young said.
Historically, coastal areas have gotten the most attention from foreign investors; the East Coast was attractive to Europeans, while the West Coast appealed to investors from Asia. But the recent boom in foreign investment has included areas such as Atlanta, Chicago and Las Vegas, said Mark Levine, director of the Burns School of Real Estate and Construction Management at the University of Denver.
"We have seen this grow from coastal areas to major cities across the U.S," Levine said.
A favorable exchange rate has been a big factor in the increase. The dollar has fallen significantly over the past three years against the 12-nation euro and the British pound. This week, a euro has been worth about $1.30, and a pound about $1.90.
"There is a sense that the falling dollar does make U.S. real estate more attractive because, relatively speaking, homes are more affordable than they are in other countries," said Walter Molony, a spokesman for the National Association of Realtors.
The weak dollar played a role in Howard Gould's decision to purchase a four-bedroom, three-bathroom home in Kissimmee, near Walt Disney World, for $260,000 last September as a rental-home investment. The Briton wasn't deterred by three hurricanes that had passed recently through the region.
"We bought at what we thought to be a good exchange rate," said Gould, a director of a turnaround and management company in Leeds, England. "We chose Florida because we like it there. We thought property, at least in that particular area, would appreciate at a fast rate."
Mortgage rates are also a draw. While 30-year fixed rate mortgages hit an eight-month high of 6.04 percent at the end of March, they have retreated since then and are still quite low by historical standards.
And the Internet makes it easier for foreign investors to look for properties in the United States and then market them to potential renters. Gould, for instance, offers images of each room of his Florida home on a Web site, along with a calendar of which days the property is available.
In 2002, the last year figures were compiled, the leading countries of origin for foreign investors of U.S. property were Japan, Canada, Britain, Germany and the Netherlands.
After four record years, U.S. home sales are expected to cool off in 2005 as the mortgage rate creeps up.
