US Real Estate is still hot with International Investors
By: Justine Assal •
I was reading an article recently on Bloomberg titled Why Trump's Immigration Crackdown Could Sink U.S. Home Prices based on the the point that immigrants were second guessing their decisions whether to purchase real estate in markets around the US and it caused me to pause and consider if is simply hype or whether I am completely off the mark with this industry. I should pause and explain briefly that not only am I the CEO of an international real estate marketing firm that publishes a tri-lingual website investUSA360.com , the information hub to buy, invest, and live in the USA but the firm (aboutglobal) also manages several real estate and immigration exhibitions in countries around the world including the UK, Brazil, Peru, Mexico, Colombia, Dubai and a considerable amount of consultancy with US developers. That said, my 20+ year multimedia involvement in this industry is extensive, with on-going and frequent travel into markets that have strong investor interest in US real estate investment and I feel that we have our finger on the pulse of international investment in the US real estate market.
So now let’s establish a couple of points to see where I believe that the article loses credibility. According to the National Association of REALTORS®' 2016 Profile of International Activity, U.S residential real estate sales to international clients accounted for $102 billion between April 2015 and March 2016. Five states accounted for half of foreign buyer purchases. Buyers flocked to Florida, California, Texas, Arizona and New York from Latin America, Europe, Canada and Asia with homeownership seen as an attractive option for buyers to visit / live and a solid investment opportunity.
According to the Bloomberg article “President Donald Trump’s immigration policies threaten to crack a foundation of the American economy: the residential real estate market. Legal and otherwise, immigrants, along a pillar of growth in home buying, are no longer feeling the warm welcome and optimism necessary for their biggest purchase”
The foreign buyers that account for the staggering $102 billion in 2016 are by and in large visiting and/or living in the US full or part time legally. Many do not wish to immigrate but those that are interested often do so with an employment or investment visa such as an L-1, E-2 (in countries that have an E-2 Treaty with the USA), an EB-5 or various other legal routes to either permanent or non-permanent residency as they are advised by an immigration attorney.
Future immigration reforms that could be proposed by the current administration will likely have an effect that could be potentially positive or negative on such buyers. Whatever the case, they will be guided by the laws at the time they apply but in most cases will buy property regardless of future aspirations to immigrate to the USA as this is not usually the main reason for their real estate purchase.
Let’s take a quick look at the two sides of immigration for the purpose of this discussion. Legal immigrants residing in the US within the legal framework of the current US immigration system may be here on a work visa as a non-permanent resident, have a green card (permanent residency) and might be in process for citizenship. Legal immigrants have either tax id or social security numbers, pay income taxes as a citizen would and may be eligible for mortgage financing that would assist them to become home owners, they are currently residing in the US and not likely to pick up and sell their home as a result of President Trump’s immigration reform that does not apply to them as they are legal and actively participating in the US economy and lifestyle. Undocumented immigrants who might be affected by this current immigration crackdown are less likely to have significant representation in the real estate market as they may have difficulty in obtaining a mortgage, they are more likely to be paid cash under the table and as a result are less likely to be in an optimal situation to purchase.
So with that said, the crackdown on illegal and undocumented immigrants is unlikely to create a major shakeup in the US real estate market as it is not only difficult to obtain financing without having proper US documentation, but they are also often working for cash, under the table – again due to lack of documentation. The $102 billion of international buyers therefore are a group entirely separate to the emotional plight of undocumented immigrants.
I do not profess that there is no negative media internationally around President Trump’s rhetoric, as there is and it has the world talking and complaining. The question is whether this stops international buyers from purchasing in the U.S though. This past week we held a 2 day Invertir USA Expo (real estate & immigration expo) in Lima, Peru and although potential investors chatted and raised their eyebrows over the state of the US political environment, they merely made snide remarks about the subject and had little to no hesitation in whether to purchase real estate as a second home or investment property. March 1, our team will be in Bogota, Colombia opening a high profile Invest USA 360 Showroom and have over 100 investors already registered to meet with US developers and attorneys to learn about projects and how to invest. We will repeat all of this in April in Sao Paulo, Brazil and then on to the next city and country.
The point is that there are certain factors that negatively affect investment in the US from residents in each country and it has more to do with currency exchange movements and political and economic factors within their own country and whether they believe that their investment will be safer in the USA. The article sited 3-4 immigrants that in all fairness, are living in the U.S illegally and were always at risk of being deported. As an immigrant myself, there is no judgment on this and I leave politics for another article. This is simply to refute the claim made that the world will stop buying US real estate and I believe that we need to pause and look at this picture more clearly. International funds coming into the USA from buyers around the world are from affluent investors interested in a variety of lifestyle, investment, commercial and immigration requirements. If the real estate market in the USA is seeing positive growth, then there will always be buyers ready to purchase. We run the risk of over simplifying a situation when we lump everyone together as either a US Citizen or foreign / immigrants and then creating headlines that feed into a collective frenzy that is not necessarily based on fact.
International buyers are investing in Miami, Orlando, New York, Houston, Los Angeles, Las Vegas and through-out the USA – the real estate market is comprised of each City and State as its own microcosm. There are no signs to indicate a “sinking” of USA real estate but instead, the normal variation between booming markets and those experiencing a slight correction.
Us Immigration policy, US Immigration Changes, L-1 visa changes, E-2 visa changes