Andrew Clark, Guardian (London), July 13, 2010
Property prices have taken a well-documented dive in sunny US holiday hotspots such as Florida. But that hasn’t encouraged many Brits back into the US homebuying market–in fact, the British have fallen behind Mexicans in the ranks of foreign property buyers in the US.
The National Association of Realtors’ annual study says the British accounted for 9% of overseas property purchases in the US during the year to March–a fall from 10.5% the previous year.
That means Britain dropped from second to third place in terms of foreign homebuyers in the US, behind Mexico which accounted for 10% of purchasers. And if present trends continue, British buyers will soon be overtaken by the Chinese, who are only a whisker behind. Canada is easily top of the table, accounting for 23% of international home purchases.
No doubt the weak British economy is largely to blame. There aren’t too many people who feel affluent enough to splash out on a holiday home just at the moment. In the wake of America’s subprime mortgage fiasco, it’s also become much harder to get a homeloan as an overseas buyer–banks such as Lloyds TSB and Bank of America used to offer easy-to-access capital. Deals with low deposits are now off the table and buyers often have to stump up 30% in cash. The NAR found that 34% of foreign buyers had been unable to complete purchases because of financing problems.
Average prices across the US continue to fall–the median amount paid by an international buyer dropped from $247,100 to $219,400, pushed down by a glut of bank-owned foreclosed property. Yet the total value of foreign purchases rose from $39bn to $41bn.
By far the most popular US state for British buyers is Florida–and when I visited the Orlando area back in March, gloomy stories were in abundance about negative equity and plummeting home values. In the hinterland of Disneyworld, a local British pub, Harry Ramsbottom’s, was up for sale due to a lack of UK business. Perhaps it’ll be replaced by a Mexican tequileria.