WORKING WITH INTERNATIONAL HOME 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

US GDP GROWTH HAS BEEN MODERATE ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $ ANNUAL 2014 QUARTERLY SERIES: GDP SOURCE: US Dept. of Commerce, Bureau of Economic Analysis

GLOBAL UNEMPLOYMENT DECLINING

US & CA UNEMPLOYMENT RATES FALLING SLOWLY SERIES: Unemployment Rate SOURCE: US Bureau of Labor Statistics, CA Employment Development Division

US & CA LABOR FORCE PARTICIPATION RATE ALSO FALLING SLOWLY SERIES: Labor Force Participation Rate SOURCE: BLS, Data Buffet

GLOBAL INFLATION STEADY

US INFLATION IS HEALTHY SERIES: Consumer Price Index SOURCE: US Bureau of Labor Statistics

DOLLAR VALUE RISING SOURCE: Federal Reserve Board

FDI NET INFLOWS GROWING Source: The World Bank

FDI IN REAL ESTATE DOWN Source: Bureau of Economic Analysis

INTERNATIONAL HOME BUYERS IN THE U.S.

INTERNATIONAL PURCHASES ACCOUNT FOR 7% OF REAL ESTATE TRANSACTIONS IN U.S. Source: NAR 2014 Profile of International Home Buying Activity

COUNTRY OF ORIGIN OF INTERNATIONAL BUYERS Source: NAR 2014 Profile of International Home Buying Activity

INTERNATIONAL BUYERS PREFER FL Source: NAR 2014 Profile of International Home Buying Activity

CALIFORNIA HOUSING MARKET The 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/November 2014 with an international client (one who is not a citizen or permanent resident of the US)

AGENTS GENERAL INTERNATIONAL BUSINESS

CLOSED TRANSACTIONS IN THE PAST 12 MONTHS DECLINED Q. How many real estate transactions did you close during the past 12 months? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

SLIGHTLY MORE REALTORS CLOSED A TRANSACTION WITH AN INTERNATIONAL CLIENT IN 2014 Q: How many of those closed transactions involved an international client (one whose permanent residence is located outside the United States)? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

# OF TRANSACTIONS CLOSED DECLINED Q: How many of those closed transactions involved an international client (one whose permanent residence is located outside the United States)? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

LAST TRANSACTION

MAJORITY ARE BUYERS Q: Which side did you represent? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MAJORITY BOUGHT IN SOUTHERN CALIFORNIA Q: Where was the property in your closed transaction with an international client located? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

TOP COUNTIES FOR INTERNATIONAL BUYERS CountyPercentage of Clients Los Angeles20% San Diego9.3% Riverside9.0% Orange8.7% Alameda7.9% Santa Clara5.4% Sacramento5.1% Contra Costa4.5% San Mateo3.7% San Francisco / San Bernardino2.8% Q: Where was the property in your closed transaction with an international client located? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MOST SALES NOT DISTRESSED Q: What type of purchase did your last international client(s) make? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MEDIAN LISTING PRICE UNCHANGED Q: What was the initial listing price of the property in your last closed transaction with an international clients? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MEDIAN FINAL SALE PRICE: $490,000 Q: What was the final sale price of the property in your last closed transaction with an international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MEDIAN FINAL SALE PRICE DROPPED 1.5% Q: What was the final sale price of the property in your last closed transaction with an international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

SALE PRICE 2% LOWER THAN LIST PRICE Q: What was the final sale price of the property in your last closed transaction with an international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MAJORITY INTEND TO USE THE PROPERTY AS A PRIMARY RESIDENCE OR INVESTMENT Q: What was the intended use of the property in your last closed transaction with an international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MORE BUYERS PURCHASING PROPERTIES BELOW $500K FOR INVESTMENT SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MORE BOUGHT CONDOS/TOWNHOMES Q: What type of property did your last international client purchase/sell? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

NEARLY HALF BOUGHT IN THE SUBURBS Q: Please select the category that best describes the location of the property in your last closed transaction with an international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MEDIAN SQUARE FEET: 1,900 Q: How many square feet did the property have? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MEDIAN SQUARE FEET 5% LOWER IN 2014 Q: How many square feet did the property have? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

WHY BUY NOW? Q: What was your clients main reason for buying now? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MAJORITY ONLY CONSIDERED THE U.S. Q: In which cities outside the U.S. did your buyer consider purchasing real estate? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

WHY THE UNITED STATES? Q: Why did your last international buyer choose to purchase in the U.S.? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MORE BUYERS PURCHASING PROPERTIES ABOVE $1M FOR INVESTMENT & BUSINESS SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

FEWER FIRST TIME BUYERS Q: In your last closed transaction with an international client, was that the buyers first home purchased in the U.S.? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

96% OF INTERNATIONAL BUYERS OWN OTHER PROPERTIES Q: How many other properties does your last international buyer own? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

AVERAGE NUMBER OF OTHER PROPERTIES OWNED DECLINED Q: How many other properties does your last international buyer own? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MORE CLIENTS HIRED PROFESSIONALS TO HELP FACILITATE TRANSACTION IN 2014 Q: Did your client hire any of the following professionals to help facilitate the transaction? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

FEWER PROPERTIES FOUND OFF THE MLS Q: How did you find the property for your international buyer? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

BUYERS INTEND TO KEEP THE PROPERTY LONGER Q: How many years does your last international buyer intend to keep the property? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MORE PROPERTIES MANAGED BY PROPERTY MANAGERS IN 2014 Q: Who will manage the property in your last closed transaction with an international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

FINANCING

FEWER INTERNATIONAL BUYERS PAID CASH Q: How did your last international buyer pay for the property? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MORE BUYERS PURCHASING PROPERTIES BELOW $500K PAID CASH SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

DOWN PAYMENT DECLINED Q: How much was the down payment for the home purchased (as a percentage of the sale price)? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

DOWN PAYMENT CAME MOSTLY FROM PERSONAL SAVINGS Q: What was the source of the down payment in your last closed transaction with an international buyer? N=87 SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MORE ACQUIRED FIXED RATE LOANS IN 2014 Q: What type of loan did your last international buyer acquire? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MORE ACQUIRED 30-YEAR LOAN TERMS Q: What is the duration of the loan in your last closed transaction with an international buyer? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

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) SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MAJORITY DIDNT HAVE PROBLEMS WITH TRANSACTION Q: What, if any, other problems did your last international buyer encounter with the transaction? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

CLIENT / AGENT RELATIONSHIP

REFERRALS ARE BEST WAY TO FIND INTERNATIONAL BUYERS Q: How did you find your last international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

INTERNATIONAL WEBSITES ARE GOOD WAY TO REACH FOREIGN BUYERS Q: How did you market yourself to international clients? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

EMAIL IS MOST POPULAR FORM OF COMMUNICATION Q: How did you primarily communicate with your last international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MOST AGENTS & CLIENTS COMMUNICATE IN ENGLISH Q: In which language did you primarily communicate with your last international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MAJORITY AGENTS & CLIENTS COMMUNICATE VIA SMARTPHONE Q: Which technological device did you utilize the most in communicating with your last international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

HALF FOUND PROPERTY IN 1 MONTH OR LESS Q: How many weeks did you spend looking for a property with your last international buyer? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

FEWER WEEKS SPENT LOOKING FOR PROPERTY Q: How many weeks did you spend looking for a property with your last international buyer? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MAJORITY VIEWED < 9 PROPERTIES Q: How many different properties did you view with your last international buyer prior to the client making a purchase? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

FEWER PROPERTIES VIEWED IN 2014 Q: How many different properties did you view with your last international buyer prior to the client making a purchase? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

70% MADE MULTIPLE OFFERS Q: How many offers did your last international buyer make on other properties (in addition to the one purchased)? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

FEWER OFFERS MADE IN 2014 Q: How many offers did your last international buyer make on other properties (in addition to the one purchased)? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

WHO ARE INTERNATIONAL BUYERS? Demographics

TYPICAL INTERNATIONAL BUYER 81% Married 81% College Educated 74% Male 47% Asian 43 Years Old $200K Median Income

MANY INTERNATIONAL CLIENTS FROM CHINA Q: Please tell us about your last closed transaction with an international client. What is your clients country of permanent residence? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

CHINESE REMAINS TOP LANGUAGE AMONG INTERNATIONAL BUYERS Q: What is your last international clients primary language? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MAJORITY ARE INDIVIDUALS Q: Was your last international client a(n): SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MAJORITY OF INDIVIDUAL BUYERS ARE MALE Q: What is your (last international) clients gender? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

INTERNATIONAL BUYERS ARE GETTING YOUNGER Q: What was your (last international) clients age at the time the transaction closed? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

MOST INTERNATIONAL BUYERS ARE MARRIED Q: What was your (last international) clients marital status at the time the transaction closed? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

> 8/10 INTERNATIONAL BUYERS ARE COLLEGE EDUCATED Q: What is the highest level of education your (last international) client had completed at the time the transaction closed? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

OCCUPATION OF INTERNATIONAL BUYERS Q: What does your last international client do for a living? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

NEARLY 1/2 INTERNATIONAL BUYERS ARE ASIAN Q: How would you describe your (last international) clients ethnic background? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

ANNUAL INCOME/REVENUE Q: What is your (last international) clients annual income/revenue? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS

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WORKING WITH INTERNATIONAL HOME BUYERS IN CALIFORNIA Presented by Carmen Hirciag Senior Research Analyst