Miami holds own in international sales of real estate

Miami was able to hold its own even as Florida mirrored national trends with fewer international sales but significantly higher dollar volume of residential sales to foreigners in 2015, according to a market update by Teresa King Kinney, CEO of the Miami Association of Realtors, at the Greater Miami Chamber of Commerce’s South Florida Real Estate Summit.

Compared to national figures, Miami’s international market remained strong through 2015, she said. Of all Miami residential sales, she told the summit crowd last week, 22% in Miami went to international buyers compared to the national average of 4%.

Similarly, “36% of the Miami dollar volume was international sales,” Ms. Kinney said, compared to the 8% national average. The mean purchase price in Miami for international clients in 2015, she reported, was $499,600.

Ms. Kinney said that nationally the number of sales to international customers fell 10% – from 232,600 sales to foreigners in 2014 to 209,000 in 2015. However, the dollar volume of sales to foreigners rose 13% – from $92 billion in 2014 to $104 billion in 2015.

Similarly, Florida tallied fewer international sales in 2015 but at significantly higher dollar volume. Florida international sales dropped to 44,000 in 2015 from 52,300 in 2014. The dollar volume of international sales rose to $23.7 billion in 2015 from $15.7 billion in 2014.

The reason for the drop is the strong dollar, Ms. Kinney said, as foreign currencies dwindling against the dollar raised the cost of US homes for international buyers.

The most significant effect on international clients was exchange rates – 53% of international clients claimed that exchange rate changes had a “very significant effect in 2015,” Ms. Kinney said. In 2014, only 39% of international clients claimed the same.

“We are seeing fewer sales to Canadians but about the same amount to Chinese buyers,” Ms. Kinney said. Figures show that 16% of international sales of US real estate came from China and 14% came from Canada.

“Canada has always been number one as Florida buyers,” Ms. Kinney said. In 2015, however, 11% of foreign buyers were Canadians, a steep drop from 32% in 2014. The steepest rise came from Venezuelan buyers, up to 18% in 2015 from just 3% in 2014.

The average price of property purchased in Florida by all international buyers is $538,000, with the Chinese spending the most, at an average of $1,064,800.

“One-fifth of all international sales in the country were made in Florida,” Ms. Kinney said, referencing a figure confirming that 21% of international residential buyers purchased in Florida. The second top state was California, with 5% fewer buyers than Florida.

South Florida leads the entire Florida international market, claiming exactly half of international sales in 2015, with Miami’s 36% of the state’s international sales and Fort Lauderdale’s 14% of the state’s international sales. South Florida was rated the number one market in the US for overall international real estate demand.

In Miami-Dade, it was Venezuelan clients who purchased the most property in 2015, with 26% of all international sales being from Venezuela, a jump from 16% in 2014. In fact, Latin America boasted the most international buys in Miami-Dade at 76%, with the next largest percentage being from Asia/Oceania at only 16%. The next top three Latin American countries for international clients following Venezuela in Miami-Dade were Brazil with 14%, Argentina with 12% and Colombia with 8%.

Foreign buyers preferred condominium properties. In 2015, 52% of foreign buyers purchased condominiums compared to 30% single-family detached homes, 11% townhouses, 5% commercial property and 2% land or other properties.

Overall, the decline of the national number of sales to international customers is because most currencies weakened against the dollar. This caused the cost of US homes to be higher for international buyers because of exchange rates. For example, a US existing home purchased for 211,000 Canadian dollars in 2014 cost 252,000 Canadian dollars in 2015. More notably, a US existing home purchased at 451,000 Brazilian reals in 2014 cost 583,000 Brazilian reals in 2015.

Argentinean buyers are facing the biggest blowback because of a change in currency rates from the Argentinean peso to the American dollar.

In January 2015, 1 US dollar was equal to 8.63706 Argentinean pesos; in January 2016, 1 US dollar was equal to 14.0035 Argentinean pesos. This equals a 62.1% change in currency rates. This effect translates into Argentineans finding that purchasing property in Miami will be 62.1% more expensive for them in 2016 than it was in 2015.

“Yeah it’s okay,” Ms. Kinney said of the decline in total US sales abroad. “We are hoping the blip only lasts a year.”