February 19th, 2015 at 2:00 pm

International home buyers

With more international home buyers than ever before and Southern California as a destination of choice, there’s no denying that overseas buyers will affect the local real estate market.

A report from the National Association of Realtors estimated that $92.2 billion was spent by the international market. This is an increase from $68.2 billion in the previous period. California is one of the four states that accounted for the majority of total reported purchases. Los Angeles and Irvine properties remain popular with the international community.

More buyers means more competition. This can work to the advantage of home sellers in highly sought-after areas. When competition for homes is high, buyers have the ability to raise their prices. In some neighborhoods, buyers are selling their home for several thousands of dollars more than what they would have sold for just one year ago. The international buyer is more likely to pay in cash than the American buyer, which ultimately helps both the buyer and the seller close on the home more quickly. Domestic buyers can lose out in this case if they need to qualify for a mortgage.

An increase in international buyers doesn’t just affect home sellers. Developers are also changing the way they do business. Many new properties are designed with the overseas buyer in mind. For example, a home may be designed with a second kitchen for wok cooking, which is fairly smoky and requires slightly different equipment from the traditional American kitchen.

Although designing a home with an international audience in mind does not guarantee an overseas buyer, some builders find targeting this audience to be a profitable strategy.

The international buying trend is likely to continue throughout 2015 although some experts predict it is at a point of tapering out soon.

If you missed part one, read it here.

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