Florida, still the Top Destination for Foreign Real Estate Buyers
By Milo • 7/15/2021
Florida has been the favorite U.S. market for foreign real estate investment for the last twelve years. The 2020 Profile of International Transactions in U.S. Residential Real Estate report from the National Association of Realtors named Florida as the strongest market for international clients — seeing the largest share of property purchases at 22% of the national total.
With 22% of the total international investment volume anchored in Florida, foreign buyers drastically preferred investing in Florida compared to other locations. California was the runner-up, fostering 15% of all purchases. Texas was in third place, with 9% of the nation’s transactions.
In 2021, Florida continues to meet the market demands that international clients are seeking for their U.S. property investments. Here is a deeper look at why Florida is the top destination for foreign real estate investors, as well as some helpful tips for purchasing residential assets in Florida as a foreign national.
Three Reasons Why Florida is the Leading U.S. Destination
Florida’s prime coastal location and diverse, affordable assets attract foreign investors.
According to NAR’s report, in 2020, most of Florida’s foreign investment activity came from Latin America and Canada. Specifically, Florida was the leading destination for Canadian and Colombian investors.
Foreign buyers from Canada invested $11.5 billion in U.S. residential properties, with 50% of Canadian investors purchasing in Florida. Foreign buyers from Mexico invested $9.5 billion in U.S. properties, with 14% of purchases in Florida. Colombian investors purchased $1.3 billion in U.S. real estate with 78% of their deals fueling Florida purchases.
Here are a few reasons why Florida caught the attention of international investors, specifically from Latin America and Canada.
#1. Florida Offers Better Prices Compared to Global Cities
According to NAR, one of the main reasons why foreign investors choose U.S. metro areas is because the prices for residential properties are typically less expensive than properties in central areas of global cities. 26% of international buyers responding to NAR’s survey said that U.S. homes were less expensive than assets in their home countries.
For example, Toronto’s price per square meter was $10,947. São Paulo, Brazil averaged $4,833, and Buenos Aires, Argentina averaged $3,660 per square meter. The least expensive home prices in Latin America, Mexico City’s $2,834 per square meter and San Jose’s $1,938 per square meter, are still dramatically more expensive than Florida’s property values.
In 2020, the median property price in Miami-Fort Lauderdale-West Palm Beach was $375,000, with a price per square meter of $2,240. The Orlando-Kissimmee-Sanford metro area of Northern Florida had median property values of $285,000, at $1,700 per square meter. The eastern coast metro hub of Tampa-St. Petersburg-Clearwater saw median home prices of $252,000 and $1,510 per square meter.
International buyers can maximize their investment potentials by purchasing lower-priced assets in Florida compared to other cities worldwide.
#2. Florida Real Estate is Priced Lower than Other Major U.S. Markets
Price-wise, Florida also competes with other U.S. metros. The San Jose-Santa Clara metro of California averaged $8,070 per square meter. San Francisco, Oakland, Hayward averaged $5,890. Boulder, Colorado’s median price per square meter was $3,720. New York’s tri-state area averaged $2,510 per square meter.
Even Florida’s most expensive resort metro area, Naples-Immokalee-Marco Island, was $2,870 per square meter. Compared to a market like San Jose in California with $8K per square foot, international clients could still save a minimum of roughly $5,000 per square meter by shopping in Florida metros.
#3. Florida Offers More Suburban Properties than Other U.S. Metro Areas
Foreign investors are primarily interested in suburban locations, which typically offer larger properties and more land. In 2020, NAR reports that 48% of international clients purchased homes in the suburbs, with only 29% of buyers purchasing in urban areas.
NAR’s Chief Economist, Lawrence Yun, stated that “new patterns of domestic migration are trending away from expensive cities to more affordable suburbs and small communities because of the pandemic and greater work-from-home possibilities.”
However, Yun anticipates that in the coming years, “better opportunities may become available for foreign buyers in large U.S. cities.” This could drive investment demand in Florida beyond the suburbs and into the state’s popular metro hubs, such as the Miami-Fort Lauderdale-West Palm Beach area.
Three Things to Know About Real Estate Investing in Florida
If you’re interested in investing in Florida’s real estate, keep these three considerations in mind to strategically guide your deals.
#1. Consider What Property Types are Best For Your Portfolio
Florida offers international buyers various property types to choose from, including single-family homes and condominium units.Before buying in Florida, consider which category of assets best fits your portfolio needs.
In 2020, the majority of international buyers purchased single-family homes or townhouses. 52% of investors from Colombia purchased condominiums, with 78% of their total investment activity taking place in Florida.
#2. International Buyers Typically Purchase Higher Priced Assets
International buyers typically spend more on their U.S. properties than the country’s median sales price for all purchases. In 2020, foreign buyers paid an average of $314,600 for their U.S. homes, while the median price for all sales was $274,600. 8% of international buyers purchased properties worth more than $1 million, compared to only 3% of all buyers.
According to NARs, this price increase is due to international buyers’ location and property type preferences.Understanding the property’s intended use and long-term investment potential can help buyers best leverage their transaction finances.
#3. Work With Milo to Finance Your Investment
In 2020, 39% of all international buyers paid all-cash for their U.S. properties. Obtaining financing was the top difficulty faced when investing in U.S. real estate by 34% of international buyers.
International clients can overcome this common barrier and maximize their investment potential by getting a loan with Milo. Working with Milo gives you access to a quick, easy, and convenient lending process as well as a fully digital experience. To learn more about Milo, click here.