2014 International Home Buyer Survey

8/9/2019 2014 International Home Buyer Survey

http://slidepdf.com/reader/full/2014-international-home-buyer-survey 1/87

WORKING WITHINTERNATIONALHOME BUYERS IN

CALIFORNIA

Presented by

Carmen Hirciag

Senior Research Analyst



THINK GLOBALLY

What is going on in the world economy?



GLOBAL GDP EXPECTED TO IMPROVE



3.1%2.7%

1.9%

-0.3%

-3.1%

2.4%

1.8%

2.8%

1.9%

-2.1%

4.6%5.0%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1-14 Q2-14 Q3-14

US GDP GROWTH HAS BEEN MODERATE

ANNUAL PERCENTCHANGE, CHAIN-TYPE (2005) $

ANNUAL 2014 QUARTERLY

SERIES: GDPSOURCE: US Dept. of Commerce, Bureau of EconomicAnalysis



GLOBAL UNEMPLOYMENT DECLINING



US & CA UNEMPLOYMENT RATES FALLING SLOWLY

7.2%

5.8%

0%

2%

4%

6%

8%

10%

12%

14% CA US

SERIES: Unemployment RateSOURCE: US Bureau of Labor Statistics, CA Employment Development Division



US & CA LABOR FORCE PARTICIPATION RATE ALSO

FALLING SLOWLY

59%

61%

63%

65%

67%

69%CA US

SERIES: Labor Force Participation RateSOURCE: BLS, Data Buffet



GLOBAL INFLATION STEADY



US INFLATION IS HEALTHY

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

SERIES: Consumer Price IndexSOURCE: US Bureau of Labor Statistics



DOLLAR VALUE RISING

50

60

70

80

90

100

110

120

130

140

2 0 0 0 . 0

1

2 0 0 1 . 0

1

2 0 0 2 . 0

1

2 0 0 3 . 0

1

2 0 0 4 . 0

1

2 0 0 5 . 0

1

2 0 0 6 . 0

1

2 0 0 7 . 0

1

2 0 0 8 . 0

1

2 0 0 9 . 0

1

2 0 1 0 . 0

1

2 0 1 1 . 0

1

2 0 1 2 . 0

1

2 0 1 3 . 0

1

2 0 1 4 . 0

1

Value of Dollar Vs Basket of Currencies

SOURCE: Federal Reserve Board



FDI NET INFLOWS GROWING

$0.0

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

$350.0

B i l l i o n

s o f $

Source: The World Bank



FDI IN REAL ESTATE DOWN

$0.0

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

$3,000.0

$3,500.0

$4,000.0

M i l l i o n

s o f $

Source: Bureau of Economic Analysis



INTERNATIONAL HOME BUYERS IN

THE U.S.



INTERNATIONAL PURCHASES ACCOUNT FOR 7% OF

REAL ESTATE TRANSACTIONS IN U.S.

Non-internation

al93%

Foreigners (non-

US resident)

3%

Foreigners (US

resident)

4%

Sales (Billions)

Source: NAR 2014 Profile of International Home Buying Activity



COUNTRY OF ORIGIN OF INTERNATIONAL BUYERS

5%

5%

9%

16%

19%

0% 5% 10% 15% 20%

UK

India

Mexico

China

Canada




INTERNATIONAL BUYERS PREFER FL

0%

5%

10%

15%

20%

25% 23%

14%

12%

6%

4%




CALIFORNIA HOUSING MARKETThe Impact of International Home Buyers



SURVEY METHODOLOGY

• email to random sample of CA REALTORS® in October-

November 2014

• 466 respondents

• closed escrow within 12 months prior to October/November2014 with an international client (one who is not a citizen or

permanent resident of the US)



AGENT’S GENERAL

INTERNATIONAL BUSINESS



CLOSEDTRANSACTIONS IN THE PAST 12 MONTHSDECLINED

0

2

4

6

8

10

12

2013 2014

11

9

Median

Q. How many real estate transactions didyou close during the past 12 months?

SERIES: 2014 International Home Buyer SurveySOURCE: CALIFORNIA ASSOCIATIONOF REALTORS®



SLIGHTLY MORE REALTORS® CLOSED A TRANSACTIONWITH AN INTERNATIONAL CLIENT IN 2014

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2013 2014

16%17%

Q: How many of those closed transactions involved an international client (one whose permanent residence is located outside the

UnitedStates)?




# OF TRANSACTIONS CLOSED DECLINED

Q: How many of those closed transactions involved an internationalclient (one whose permanent residence is located outside the

UnitedStates)?


0

0.5

1

1.5

2

2.5

3

3.5

2013 2014

3.3

2.9

# o f T r a n s a c

t i o n s

Median



LAST TRANSACTION



MAJORITY ARE BUYERS

0%

20%

40%

60%

80%

100%

2013

2014

57% 70%

30% 22%

12% 8%

Buyer Seller Both

Q:Which side didyou represent?SERIES: 2014 International Home Buyer SurveySOURCE: CALIFORNIA ASSOCIATIONOF REALTORS®



MAJORITY BOUGHT IN SOUTHERN CALIFORNIA

0%

10%

20%

30%

40%

50%

60%

70%

Southern CA Northern CA Other CA

65%

23%

12%

54%

29%

18%

2013 2014

Q:Where wasthe property in your closed transaction with an international client located?




TOP COUNTIES FOR INTERNATIONAL BUYERS

County Percentage of Clients

Los Angeles 20%

San Diego 9.3%

Riverside 9.0%

Orange 8.7%Alameda 7.9%

Santa Clara 5.4%

Sacramento 5.1%

Contra Costa 4.5%

San Mateo 3.7%

San Francisco / San Bernardino 2.8%

Q:Where was the property in yourclosed transaction with an internationalclient located?




MOST SALES NOT DISTRESSED

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Equity Sale REO Sale Short Sale Other

79%

8% 7% 5%

89%

4% 3% 4%

2013 2014

Q:What type of purchase didyour last international client(s) make?




MEDIAN LISTING PRICE UNCHANGED

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

2013 2014

$500,000 $500,000

Q:What wasthe initial listing price of the property in yourlast closed transaction with an internationalclients?




MEDIAN FINAL SALE PRICE: $490,000

13%

12%

13%

14%

6%

7%5%

4%

4%

16%

6%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

Less than $200,000

$200,000 to $299,999

$300,000 to $399,000

$400,000 to $499,999

$500,000 to $599,999

$600,000 to $699,999$700,000 to $799,999

$800,000 to $899,999

$900,000 to $999,999

$1M to $1.9M

$2M+

Q:What wasthe final sale price of the property in your last closed transaction with an international client?




$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

2013 2014

$497,500 $490,000

Median

MEDIAN FINAL SALE PRICE DROPPED 1.5%





SALE PRICE 2% LOWER THAN LIST PRICE



$0$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

List Sale

$500,000 $490,000

Median



MAJORITY INTEND TO USETHE PROPERTY AS APRIMARY RESIDENCE OR INVESTMENT

0%

29%

29%

36%

4%

20%

33%

43%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Other

Vacation/Second Home

Investment/Rental Property

Primary Residence

2014

2013

Q:What wasthe intended use of the property in your last closed transaction with an international client?SERIES: 2014 International Home Buyer SurveySOURCE: CALIFORNIA ASSOCIATIONOF REALTORS®



MORE BUYERS PURCHASING PROPERTIES BELOW$500K FOR INVESTMENT


37%

56%43% 43%

21%

25%

19% 20%

40%

17%

34% 33%

2% 3% 4% 4%

0%

20%

40%

60%

80%

100%

120%

below $500k $500k-$1M Above $1M All buyers

Other

InvestmentVacation/2nd home

Primary residence



MORE BOUGHT CONDOS/TOWNHOMES

1%

2%

6%

5%

28%

59%

1%

1%

4%

4%

23%

67%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Commercial office space

Comercial retail space

Other

Residential MFH

Residential condo/townhome

Residential detached SFH

2014

2013

Q:What type of property didyour last internationalclient purchase/sell?SERIES: 2014 International Home Buyer SurveySOURCE: CALIFORNIA ASSOCIATIONOF REALTORS®



NEARLY HALF BOUGHT IN THE SUBURBS

2%

9%

9%

38%

42%

1%

9%

10%

33%

48%

0% 10% 20% 30% 40% 50% 60%

Other

Resort area

Small town/rural area

Central city/urban

Suburban

2014

2013

Q: Please select the category that best describesthe location of the property in your last

closed transaction with an international client?




MEDIAN SQUARE FEET: 1,900

6.6%

45%

28%

9.6%

2.9%

8.2%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

< 1,000 ft

1,000 - 1,999 ft

2,000 - 2,999 ft

3,000 - 3,999 ft

4,000 - 4,999 ft

5,000+ ft

Q: How many square feet did the property have?




MEDIAN SQUARE FEET 5% LOWER IN 2014

Q: How many square feet did the property have?


0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2013 2014

2,000 1,900S

q

u

a

r

e

F

e

e

t

Median



WHY BUY NOW?

12%

14%

4%

10%

15%

23%

0% 5% 10% 15% 20% 25%

To flip for profit

Change in family status

Changed jobs/relocated

To rent out property

2014 2013

Q:What wasyour clients’ main reason for buying now?




MAJORITY ONLY CONSIDERED THE U.S.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014

78% 75%

22% 25%

Only US Other countries

Q: In which cities outside theU.S. didyour buyer consider purchasing real estate?




WHY THE UNITED STATES?

8%

21%

6%

13%

13%

20%

22%

30%

0% 5% 10% 15% 20% 25% 30% 35%

Acquire legal status

Business

Child attending college

Investment/tax advantages

Other

To be closer to friends and family

2014 2013

Q:Why didyour last international buyer choose topurchase in the U.S.?




MORE BUYERS PURCHASING PROPERTIES ABOVE $1MFOR INVESTMENT & BUSINESS


0% 10% 20% 30% 40% 50%

Acquire legal

status/immigration

Child attending college

Business

Investment/tax advantages

To be closer to family/friends

$1M+

$500k-$1M

below $500k

All buyers



FEWER FIRST TIME BUYERS

0%

10%

20%

30%

40%

50%

60%

2013 2014

59%

54%

Q: In your last closed transaction with an international client,was that the buyer’s first home purchased in theU.S.?




96% OF INTERNATIONAL BUYERS OWN OTHERPROPERTIES

26% 27%

19%

11%

6.8%

2.7%

0%

5%

10%

15%

20%

25%

30%

1 2 3 4 5 6+

Q: How many other properties does yourlast international buyer own?




AVERAGE NUMBER OF OTHER PROPERTIES OWNEDDECLINED

Q: How many other properties does yourlast international buyer own?


-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2013 2014

3.2

2.8



MORE CLIENTS HIRED PROFESSIONALS TO HELPFACILITATE TRANSACTION IN 2014

7%

15%13%

23%

0%

5%

10%

15%

20%

25%

2013 2014

AttorneyAccountant

Q: Did your client hire any of the following professionals to help facilitatethe transaction?




FEWER PROPERTIES FOUND OFF THE MLS

0% 10% 20% 30% 40% 50% 60% 70%

From seller directly

Advertisement

Builder

Open house

Off-MLS Listing

Client found property

Other

My listing

MLS

2014

2013

Q: How did you find the property for your internationalbuyer?




BUYERS INTEND TO KEEP THE PROPERTY LONGER

Q: How many years does your last international buyer intendto keep the property?


0

1

2

3

4

5

6

7

2013 2014

5

7

#

o

f

Y

e

a

r

s

Median



MORE PROPERTIES MANAGED BY PROPERTYMANAGERS IN 2014

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014

53% 49%

36%38%

11% 13%

Owner Property Manager Other

Q:Who will manage the property in your last closed transaction with an international client?




FINANCING



FEWER INTERNATIONAL BUYERS PAID CASH

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2013 2014

69%63%

3%

31% 35%

All cash Cash from financing in home country Obtained financingin US

Q: How did your last international buyer pay for the property?




MORE BUYERS PURCHASING PROPERTIES BELOW$500K PAID CASH


66%57% 60% 63%

3.2%

2.8% 1.5% 3.0%

31%40% 39%

35%

0%

10%

20%

30%

40%50%

60%

70%

80%

90%

100%

below

$500k

$500k-$1M Above $1M All buyers

Obtained US financing

Cash from financing in

home country

All Cash



DOWN PAYMENT DECLINED

Q: How much was the down payment for the home purchased (as a percentageof the sale price)?


0%

5%

10%

15%

20%

25%

30%

2013 2014

30%

23%



DOWN PAYMENT CAME MOSTLY FROM PERSONALSAVINGS

2%

2%

5%

15%

82%

3%

5%

7%

11%

85%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Other

Sale of personal assets (other than real property)

Gift

Proceeds from a sale of previous property

Personal savings

2014 2013

Q:What wasthe source of the down payment in your last closed transaction with an internationalbuyer? N=87




MORE ACQUIRED FIXED RATE LOANS IN 2014

0%

10%

20%

30%

40%50%

60%

70%

80%

90%

Fixed rate Adjustable rate Other

80%

16%

5%

84%

14%

2%

2013 2014

Q:What type of loan didyour last international buyer acquire?




MORE ACQUIRED 30-YEAR LOAN TERMS

0%

10%

20%

30%

40%

50%

60%

70%

80%

30 years 10 years Other 15 years

71%

10%15%

5%

78%

8% 8% 6%

2013 2014

Q:What is the duration of the loan in your last closed transaction with an international buyer?




OBTAINING FINANCING IS LESS DIFFICULT

Q: Please rate how easy or difficult it was for your last international buyer to obtain financing. (1=Very easy, 10=Very difficult)


0.0

1.0

2.0

3.0

4.0

5.0

6.0

2013 2014

5.04.6



MAJORITY DIDN’T HAVE PROBLEMS WITHTRANSACTION

0% 2% 4% 6% 8% 10% 12% 14% 16%

Figuring out property taxes

Finding insurance

Immigration

Bringing funds into the US

Finding a property

1%

2%

3%

15%

16%

Q:What, if any, other problems didyour last international buyer encounter with the transaction?




CLIENT / AGENT RELATIONSHIP



REFERRALS ARE BEST WAY TO FINDINTERNATIONAL BUYERS

2%

4%

5%

6%

7%

7%

15%

21%

22%

0% 5% 10% 15% 20% 25%

Prior dealings with my brokerage

"For Sale" sign

Client responded to my ad

Referral from another agent

Open house

Client is a friend

Client found me online

Referral from a previous buyer

Referral from a friend

Q: How didyou find yourlast internationalclient?




INTERNATIONAL WEBSITES ARE GOOD WAYTO REACH FOREIGN BUYERS

Q: How didyou market yourself to international clients?


0% 5% 10% 15% 20% 25% 30% 35% 40%

International social media

International magazines

International websites

2%

2%

38%



EMAIL IS MOST POPULAR FORM OFCOMMUNICATION

55%

30%

8%6%

1%0%

10%

20%

30%

40%

50%

60%

Email Telephone Text Message Other Video Calls

Q: How didyou primarilycommunicate with yourlast international client?




MOST AGENTS & CLIENTS COMMUNICATE INENGLISH

Q: In which language didyou primarily communicate with your last international client?


0% 10% 20% 30% 40% 50% 60% 70% 80%

Other

Spanish

Chinese

English

4%

6%

11%

80%



MAJORITY AGENTS & CLIENTSCOMMUNICATE VIA SMARTPHONE

2%

4%

4%

6%

7%

31%

45%

1%

2%

3%

4%

5%

31%

54%

0% 10% 20% 30% 40% 50% 60%

Landline

Tablet

Desktop

Other

Mobile phone

Laptop

Smartphone

2014 2013

Q:Which technological devicedid you utilize the most in communicating with your last international client?


O O O O



HALF FOUND PROPERTY IN 1 MONTH ORLESS

Q: How many weeks didyou spend lookingfor a property with yourlast international buyer?


0%

5%

10%

15%

20%25%

30%

35%

40%

45%

50%

0-4 5-8 9-12 12-16 17-20 21-24 24-52

50%

18%

14%

7%

2% 2%

8%

# ofWeeks

FEWER WEEKS SPENT LOOKING FOR



FEWER WEEKS SPENT LOOKING FORPROPERTY

Q: How many weeks didyou spend lookingfor a property with yourlast international buyer?


0

2

4

6

8

10

12

2013 2014

11.1

8.4# of Weeks

Average



MAJORITY VIEWED < 9 PROPERTIES

13%

2.6%

5.1%6.6%

8.1% 8.5%

3.7%5.5%

24%

9.6%

6.6% 6.6%

0%

5%

10%

15%

20%

25%

30%

1 2 3 4 5 6 7 8 9-15 16-20 20-30 30-50

# of Properties

Q: How many different propertiesdid you view with yourlast international buyer prior to the client making a purchase?




FEWER PROPERTIES VIEWED IN 2014

Q: How many different propertiesdid you view with yourlast international buyer prior to the client making a purchase?


-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

2013 2014

9.0

8.0

# o f P r o p e r t

i e s

Median



70% MADE MULTIPLE OFFERS

Q: How many offers didyour last international buyer make on other properties(in addition to the one purchased)?

0%

5%

10%

15%

20%

25%

1 2 3 4 5 6-10 11+

20%

18%

11%

5%6% 7%

3%

Number of Other Offers




FEWER OFFERS MADE IN 2014

Q: How many offers didyour last international buyer make on other properties(in addition to the one purchased)?

0

1

1

2

2

3

3

4

4

5

2013 2014

4.1

2.5

N

u

m

be

r

o

f

O

t

h

e

r

O

f

f

e

r

s

Average




WHO ARE INTERNATIONAL

BUYERS?Demographics



TYPICAL INTERNATIONAL BUYER

81%Married

81%College

Educated

74%Male

47%Asian

43Years Old

$200KMedianIncome

MANY INTERNATIONAL CLIENTS FROM



MANY INTERNATIONAL CLIENTS FROMCHINA

Q: Please tell us about your last closed transaction with an international client.Whatis yourclient’s country

of permanent residence?

3.8%

3.5%

8.3%

14%

35%

4.7%

4.7%

9.1%

11%

36%

0% 5% 10% 15% 20% 25% 30% 35% 40%

India

UK

Mexico

Canada

China

2014 2013


CHINESE REMAINS TOP LANGUAGE AMONG



CHINESE REMAINS TOP LANGUAGE AMONGINTERNATIONAL BUYERS

2.2%

2.6%

2.9%

2.9%

10%

29%

38%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Russian

French

German

Japanese

Spanish

English

Chinese

Q:What is your last international client’s primary language?




MAJORITY ARE INDIVIDUALS

Q:Was your last international client a(n):

Individual 84%

LLC 6% Corporation 4%

Other

5%




MAJORITY OF INDIVIDUAL BUYERS ARE MALE

Q:What is your (last international) clients’ gender?


0%

10%

20%

30%

40%

50%

60%

70%

80%

74%

26%

INTERNATIONAL BUYERS ARE GETTING



INTERNATIONAL BUYERS ARE GETTINGYOUNGER

0

5

10

15

20

25

30

35

40

45

2013 2014

4543

A

g

e

Median

Q:What wasyour (last international) client’s age at the time the transaction closed?


MOST INTERNATIONAL BUYERS ARE



MOST INTERNATIONAL BUYERS AREMARRIED

Q:What was your (last international)client’s marital status at the time the transaction closed?


Married 81%

Single 18%

Other 1%

> 8/10 INTERNATIONAL BUYERS ARE COLLEGE



> 8/10 INTERNATIONAL BUYERS ARE COLLEGEEDUCATED

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Grade school

or less

Some high

school

High school Some college 4-year college Graduate

school

1% 2%5%

11%

35%

46%

Q:What is the highest level of education your (last international) client hadcompleted at the time the transaction closed?




OCCUPATION OF INTERNATIONAL BUYERS

0% 2% 4% 6% 8% 10% 12% 14% 16%

Developer

Investor

Banker

Manufacturing

Teacher

Attorney

Doctor

Finance

IT

EngineerBusiness/owner

2.0%

2.0%

3.0%

4.0%

4.0%

5.0%

5.0%

5.0%

11%

12%

15%

Q:What does yourlast international client do for a living?


NEARLY 1/2 INTERNATIONAL BUYERS ARE



NEARLY 1/2 INTERNATIONAL BUYERS AREASIAN

0% 10% 20% 30% 40% 50%

1%

11%

14%

27%

47%E

t

h

n

i

c

i

t

y

Asian

White

Other

Hispanic

Black

Q: How would you describe your (last international) client’s ethnic background?




ANNUAL INCOME/REVENUE

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

$200,000

2013 2014

$200,000 $200,000

Q:What is your (last international) client’s annual income/revenue?








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Documents

2014 International Home Buyer Survey