Foreign Buyers Avoiding U.S. Homes

Despite record U.S. home price affordability, international buyers have been unable to take advantage because of the worldwide recession and credit crunch.

According to a report from the National Association of Realtors (NAR), home sales to foreign clients dropped 9.4% in the year ended in May to 154,000. Among international clients who did purchase, almost half paid cash for their property because securing a mortgage was more difficult than before.

It’s at least three times more difficult for foreign buyers to get financing than it is for U.S. citizens who have all the right documentation and good credit because banks think people will walk away from their vacation home before they walk away from their primary residence. The NAR expects the latest improvements in the credit market to turn the tide in that area however.

While Canada and the United Kingdom remain the largest international shareholders in U.S. real estate market, the NAR said buyers from those countries dwindled. The percentage of buyers from Mexico and India increased.