Foreign Buyers May Help Local Homeowners Avoid Foreclosure
The past few months has seen a darkening in the economic outlook for the US. In addition to having a housing crisis, it now seems that the country is experiencing a recession. The strength of the dollar has fallen and many consumers are wondering if there is any relief to be seen in the near future. In a quirky turn, these problems may provide incentive for foreign investors to encourage the housing market. These foreign investors may help stop foreclosures around the country.
One of the reasons that many homeowners are finding it difficult to sell their homes is the fact that many would-be buyers either cannot afford the prices or they cannot qualify for mortgage loans. As a result, they have found they have little choice but to continue to rent and wait for the housing market to stabilize before they venture into the home buying process. Some homeowners are finding interested buyers in a surprising source; however. Today, homeowners are just as likely to discover buyers hailing from abroad as from next door.
Expert wisdom is speculating that investment from Europeans is highly likely to increase in the coming year. Many foreign investors has seen the value in buying houses in the U.S. Prices have come down which is making them far more attractive. In addition, the weak dollar and strong euro has provided an even greater deal for those earning in euros. These foreign first time buyers are poised to replace the local first-time buyers before they were pushed out of the housing market as a result of the recent boom and crash.
If this foreign investment continues, it could provide assistance to homeowners who need to upgrade to larger homes or who need help avoiding foreclosure.
Brokers are reporting that inquiries from foreign investors are definitely on the rise. Compared to the number of inquiries that were received just a year ago, many brokers are seeing an increase of as much as five times the amount witnessed just a year ago.
With the weak dollar, a foreign buyer who purchases a house today would need less money in euros to make a significant down payment on a house. In fact, foreign buyers could make a $50,000 down payment for little more than 34,000 euros at the current exchange rate. That's nearly a 4,000 euro decrease in one year. With this result, foreign buyers are able to buy houses in the United States for less of an investment than local buyers.
The good exchange rate has definitely provided help in increased spending power in many areas. In certain areas, like Chicago and New York, the demand has noticeably increased. In some cases, the demand has incresed so much that it is actually starting to outpace supply. Florida and California are proving to be popular with foreign investors. The latter two markets, which have been the hardest hit by the recent crash, are embracing the foreclosure relief with open arms. Florida, specifically, is still limping along because of the condo market crash.
Sellers and agents have quickly latched onto the idea that the place to look for interested buyers could very well be overseas. As a result, many properties are now being marketed specifically toward foreign buyers. High-end luxury homes that have languished on the market for months are some of the first to be targeted for interested foreign buyers.
The Internet has proven to be a successful marketing tool in the past and today agents and sellers have discovered it is often the easiest way to reach foreign buyers. Compared to other advertising mediums it is often far less expensive and allows them to reach a broader audience. When marketing properties toward foreign buyers, this can be particularly important.
Foreign buyers may not be the complete salvation that homeowners and real estate agents need to fully recover from the housing crash, however, they are are definitely offering a bit of welcome relief in many markets and may help stop foreclosure for many homeowners.
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Published August 7th, 2008
Filed in Finance, Real Estate
