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More Foreigners are Buying Luxury Homes – But Why?

Colorado MansionRecent reports indicate that luxury home sales are on the rise among foreign buyers. This is interesting information to have if you happen to be a seller, since it means there are new options available to you if you want to appeal to the rising foreign market. It is also something that is worth considering if you are a domestic investor, because as the market reacts to the influx of foreign buyers you might find your own options changing as a result.

Why the Change?

Despite the fact that the United States has been enduring a recession, it is important to note that the economic downturn is a global issue that other countries are dealing with as well. Thus, even when America is flagging financially, the nation still tends to be more stable than many other countries out there. With more economic stability, potential buyers are attracted to the investment opportunities that the United States possesses. Many luxury homes are easy to improve, propelling their potential resale value even higher than the initial purchase amount. As a whole, this is an enormous motivator for foreign investors to explore American real estate, and the market is beginning to feel that.

Prices Begin to Soar

Because of the influx of foreign buyers, especially buyers from China, the luxury real estate market is starting to see prices rise. The average Chinese buyer spends $591,000 on a home, as opposed to the overall United States market average of $247,000. Furthermore, sales to international buyers increased over the past years by a whopping $24 billion. The majority of this impact is felt on the luxury end of the market, since foreign buyers tend not to worry overmuch about smaller sales that don’t have as much investment value. Those who are selling might have a bigger market than they think, and those who aren’t selling now but may be selling in the future should see their home as investment property.

What the Trend Means

The shift toward more foreign luxury home purchases means two things. For those who hope to purchase a luxury home, it means that there might be some competition involved. You should make sure you have a price in mind going into negotiations and try to stay close to that limit – getting into a bidding war with a wealthy Chinese businessman is a guaranteed way to overpay. For the potential seller, it means that investment property has become more valuable. If you can present your luxury home as something which is impressive right now but which could be improved even further, you have a better chance of selling the home to somebody who hopes to flip it for a profit.

It’s hard to guess how long this new trend will last or whether it will have long-term effects on the luxury real estate industry. One thing that is sure is that if you want to be involved in buying or selling luxury homes, you need to take this new data into consideration.

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