Objective of the Report
Since 2005, the National Association of REALTORS® Research Group has conducted an annual survey for Florida REALTORS® to assess international investment trends in U.S. residential real estate, including sales volume, characteristics of foreign buyers, as well as challenges and opportunities inherent in cross-border transactions. The 2020 Profile of International Residential Real Estate Activity in Florida presents information from Florida REALTORS® members regarding residential transactions with international clients closed during the 12-month period of August 2019–July 2020. In this report, the year 2020 refers to the above 12-month period, and the year 2019 refers to the period of August 2018–July 2019. Who is an International Client? The term international or foreign client refers to two types of clients: – Non-resident foreigners (Type A): Non-U.S. citizens with permanent residences outside the United States. These clients typically purchase property as an investment and/or for vacation, or visits of less than six months to the United States. – Resident foreigners (Type B): Non-U.S. citizens who are recent immigrants (in the country less than two years at the time of the transaction) or visa holders residing for more than six months in the United States for professional, educational, or other reasons.
Florida REALTORS®, in coordination with the Miami Association of REALTORS®, issued the survey invitation to about 180,000 members. A total of 6,919 members responded to the survey over the survey period of August 15 – September 15, of which 1,078 reported a foreign buyer closed transaction during the reference period. Respondents are asked about the characteristics of the most recent transaction. To correct for over-or under-response from members from a metropolitan area, the sample distribution of respondents was reweighted by a factor that aligns the sample distribution to the membership distribution across 22 metropolitan areas and one overall non-metropolitan area. See Appendix 2 on the sample and reweighted distribution of responses.
Who is an International Client?
The term international or foreign client refers to two types of clients: – Non-resident foreigners (Type A): Non-U.S. citizens with permanent residences outside the United States. These clients typically purchase property as an investment and/or for vacation, or visits of less than six months to the United States. – Resident foreigners (Type B): Non-U.S. citizens who are recent immigrants (in the country less than two years at the time of the transaction) or visa holders residing for more than six months in the United States for professional, educational, or other reasons
Dollar volume of Florida’s existing homes purchased by foreign buyers during August 2019–July 2020, which is 11% of the dollar volume of Florida’s existing-home sales (2% decrease from the prior 12-month level of $16 billion)
Number of existing homes purchased in Florida by foreign buyers, which is 8% of existing-home sales (7% decrease from the prior 12-month period level of 36,400)
Share of foreign buyers whose primary residence is abroad (Type A)
Florida’s Top 5 Foreign Buyers
Canada ($3.2 B)
Brazil ($1.4 B)
Venezuela ($0.9 B)
Argentina ($0.6 B)
Colombia ($0.5 B)
Top 5 Foreign Buyer Destinations
Miami-Ft. Lauderdale-West Palm Beach (47.3% of foreign buyers)
Tampa-St. Petersburg-Clearwater (11.0%)
North Port-Sarasota-Bradenton (6.9%)
Cape Coral-Ft. Myers (4.7%)
Foreign buyer median purchase price ($263,400 for all Florida existing homes sold)
64% Foreign buyers who paid all-cash
66% Foreign buyers who intended to use the property for vacation, residential rental, or both uses
35% Foreign buyers who purchased condo or co-op units
89% Foreign buyers who visited Florida at least once before making a purchase
70% Foreign buyers who were referrals of personal and business contacts and former clients, or who were former clients
19% Respondents who reported clients (either non-U.S. citizen or U.S. citizen) seeking to purchase property abroad
38% Respondents who speak a language other than English
65% Respondents who “have not had problems” working with foreign buyers
Coronavirus Pandemic Plunges Global Economy Into a Recession
The coronavirus pandemic has plunged the global economy into a global recession. The International Monetary Fund projects the world economy to contract by 4.9% in 2020. Larger contractions are expected for Canada (-8.4%), the Latin American region (-8.4%), the Euro Area (-10.2%), the United Kingdom (-10.2%), and the United States (-8%).
Travel and Tourism Has Collapsed
The travel ban imposed by countries to control the spread of coronavirus has decimated the travel and tourism industry. Since April, tourist arrivals to the United States has fallen from about 5 million per month to less than half a million. During the period August 2019-July 2020, tourist arrivals fell by a third, from 78.8 million to 49.9 million. Tourist arrivals from Canada, Latin America, and Europe― the areas where most of Florida’s foreign buyers come from ― contracted by about 40%.
Decline in Non-immigrants Visas
Even before the pandemic hit, the number of business and investor-issued visas had already been on the decline. Business (B) and Investor (E) visas fell from 8.6 million in 2015 to 6.5 million in 2019. Student (F) and exchange visitor visas (J) had also declined from one million in 2015 to 780,400 by 2019.
Fall in Oil Prices
As the global economy fell into a recession in the wake of the pandemic-induced travel bans and business closures, the demand for oil and oil prices has fallen, impacting economies that are dependent on the oil industry, such as Canada and Mexico. The spot price of oil (West Texas Intermediate) fell from about $60/barrel in 2019 to a low of $16/barrel in April, although oil prices have firmed up to $40/barrel as of September 2020.
Stronger U.S. Dollar
The U.S. dollar has generally strengthened against other major currencies during the July 2019 to July 2020. The U.S. dollar had an average monthly yearover-year gain against the Canadian dollar (1.5%), the Chinese yuan (3%), euro (2.8%), and the pound (2.4%). However, the dollar has weakened since May 2020 as the U.S. continues to deal with rising coronavirus cases that poses a risk to the economic recovery.
Relaxed Monetary and Fiscal Policy
To prevent the economy from falling into a deep and long recession, the Federal Open Market Committee went into a swift and massive monetary policy accommodation, bringing down the federal funds rate to 0 to 0.25%, which has pushed down the 30-year fixed mortgage rate to a historic low of about 3% since July 2020. Congress also passed a $1.5 trillion CARES Act bill that provided funding to encourage small businesses to retain employees (Paycheck Protection Plan) and unemployment insurance to the unemployed who are not covered by the regular state programs. The unemployment rate has fallen from a peak of 14% in April to 7.9% as of September 2020, although it remains elevated relative to the pre-pandemic level of 3.5% in February 2020
Florida Residential Market Trends
Low mortgage rates and sustained job growth have boosted home sales and home prices. Demand has outpaced supply, leading to stronger price appreciation and buyer competition among all buyers, domestic or international. In July, Florida’s existing home sales rose 11.5% and pending sales were up 20.3% year-over-year. The state-wide median sales price for single-family homes was $295,000, up 10.1% from one year ago. Like the overall U.S. market, Florida’s housing market is grappling with low inventory. Inventory for single-family homes was equivalent to 2.5 months of the monthly sales’ pace overall, with higher inventory in the condo market of 5 to 6 months of supply.
Size of Florida’s Foreign Buyer Market
During August 2019‒July 2020, foreign buyer purchases of existing single-family and condominiums/co-ops in Florida decreased to $15.6 billion, a 2% decline from the previous 12-month level ($16 billion). 10% of respondents reported that they had an international transaction that did not close due to the coronavirus travel bans. The dollar volume of foreign buyer purchases accounted for 11% of Florida’s existing home sales, a decline from the prior period’s level (12%) and from past years when the share peaked at an estimated 57% in 2010. Nationally, foreign buyer purchases accounted for 4% of the dollar volume of existing home sales. Foreign buyers purchased 33,900 existing homes, a 7% decrease from the previous 12-month level (36,400). Foreign buyer purchases were 8% of Florida’s existing home sales, a decline from the prior 12-month share (9%). Nationally, foreign home buyer purchases comprised 3% of all existing home sales.
Foreign buyers whose primary residence is in another country (Type A) made up 69% of Florida’s foreign buyers, a decline compared to the prior 12-month period (71%). Among the major foreign buyers, more than eight in ten foreign buyers from Canada, the United Kingdom, and Argentina resided abroad (Type A). 40% of Florida’s foreign buyers who held a visa had a Type B2 visa and 22% had a B1 visa. EB5 visa holders accounted for 9% of foreign clients with visas. The large share of B2 visa holders indicates that a travel ban to the United States will have a big impact on the foreign buyer purchases in Florida and the United States. Nearly nine in ten foreign buyers had visited the United States at least once before purchasing a property
Origin of Foreign Buyers
Latin American/Caribbean buyers made up the largest fraction of Florida’s buyers, at 37%, but they made up a much smaller share compared to the previous 12-month period (43%). The second largest group of buyers were Canadians (21%), followed by Europeans (20%), buyers from Asia and Oceania (8%), and lastly Africans (2%). The origin of 13% of buyers was not identified by the respondents.
In terms of the number of foreign buyer purchases, the top countries of origin of foreign buyers were Canada (21%), Brazil (7%), Argentina (6%), Venezuela (5%), Colombia (5%), and the United Kingdom (5%). The fraction of buyers from these countries declined compared to the prior 12-month period, except that of the United Kingdom.
In terms of dollar volume, Canadians purchased $3.2 billion of property, followed by the Brazilians, $1.4 billion; the Venezuelans, $900 million; the U.K. buyers, $600 million; Argentines, $600 million; and Colombians, $500 million. The dollar volume of purchases of the top buyers all fell from the levels during the prior 12-month period, except in the United Kingdom and Venezuela where sales remained flat.
Destination of Foreign Buyers
While foreign buyers purchased property across the state, most foreign buyers were concentrated in Miami-Fort Lauderdale-West Palm Beach (47%), Tampa-St. Petersburg-Clearwater (11%), OrlandoKissimmee-Sanford (10%), North Port-SarasotaBradenton (7%), Cape Coral-Fort Myers (5%), and Naples-Immokalee-Marco Island (5%).
The share of Miami-Fort Lauderdale-West Palm Beach dropped to 47% from the prior 12-month period share (53%) given the decline in the share of Latin American/Caribbean foreign buyers who tend to purchase property in South Florida.
Miami-Fort Lauderdale-West Palm Beach, Orlando-Kissimmee-Sanford, and Palm BayMelbourne-Titusville foreign buyers were largely from Latin American and the Caribbean. Lakeland-Winter Haven, Punta Gorda, and North Port-Sarasota-Bradenton foreign buyers were mainly from Europe.
Port St. Lucie, Cape Coral-Fort Myers, and Naples-Immokalee-Marco Island foreign buyers were primarily Canadians. Tampa-St. Petersburg-Clearwater, Jacksonville, and Deltona-Daytona Beach-Ormond Beach attracted a more diverse mix of buyers from Latin America, Canada, Europe, and Asia.
The median purchase price among foreign buyers increased to $300,600. The median purchase price among foreign buyers was higher than the median purchase price of all properties sold in Florida. 6% of foreign buyers purchased properties worth over $1 million. Brazilians tended to purchase properties in the higher price range, with a median sales price of $438,900, followed by Venezuelans, with a median purchase price of $352,300. Canadians and buyers from the United Kingdom purchased properties in the $250,000 to $300,000 price range.
64% of foreign buyers made an all-cash purchase. This is a slightly lower share compared to the prior 12-month level (67%) and five years ago (72%), given the decrease in the share of non-resident foreign buyers who tend to make an all-cash purchase.
Among the major foreign buyers, Argentines and Canadians were the most likely to make an all-cash purchase, because a greater fraction of them were non-resident buyers (91% of Canadian buyers and 84% of Argentine buyers).
Intended Use of Property
66% of Florida’s foreign buyers purchased residential property for vacation, residential rental, or for both uses, a decline from the prior 12-month period (70%), which is in line with the decline in the share of non-resident foreign buyers (69% from 71%). Nationally, only 39% of all foreign buyers purchased properties for vacation or rental use.
Canadians were the most likely to purchase a property for vacation use, while Argentines tended to purchase a property for residential rental.
Type of Property
A higher fraction of Florida’s foreign buyers, at 47%, purchased detached single-family homes, an increase from 39% in the prior period.
Buyers from Brazil and the United Kingdom tended to purchase detached single-family homes, while buyers from Argentina and Venezuela preferred to purchase condominiums or cooperatives. A high fraction of Argentine buyers intended to rent out the condominiums.
Only 34% of Florida’s foreign buyers purchased in a central city/urban area, a decline from 43% in the prior 12-month period.
More than half of buyers from Venezuela, Colombia, and Argentina purchased a property in a central city/urban area. Canadians and buyers from the United Kingdom were the most likely to purchase a property in a resort area.
International Client Transactions
A lower fraction of Florida REALTORS®’ respondents— 37%—worked with an international client (39% in 2019). Nationally, the fraction of REALTORS® who worked with a foreign client also decreased to 19%. On average, respondents who worked with an international client had five transactions, whether it concluded successfully or not. In the national survey, respondents reported less than one client on average.
Among those who worked with an international client, a higher fraction —42%—reported a decrease in their business that is international in the past year.
A higher fraction of respondents—26%—also expect a decrease in their international buyer client transactions in the next 12 months.
Reasons Client Purchased Property
Among respondents who had an international client, the desirability of the location was the most important factor influencing a foreign buyer decision to purchase Florida real estate, cited by 47% of respondents.
How Clients View Florida Home Prices
A third of respondents reported that their clients viewed Florida home prices to be less expensive compared to prices in their home country. A smaller fraction of respondents, 25%, reported that clients viewed Florida prices as more expensive.
Source of Referrals
70% of respondents reported that their buyers were personal or business contacts, former clients, or referrals from former clients.
Reasons Client Did Not Purchase Property
Not all transactions end up successfully: among respondents who had an international client, 35% reported the client decided not to purchase property, a decrease from the prior period (38%).
Among those who had a client who decided not to purchase property, the top reasons cited were “could not find property”, “cost of property”, “exchange rate”, and “condo fees.” Type A foreign buyers are more impacted by rising prices due to the exchange rate (when the dollar strengthens) and because they can’t benefit from the low U.S. mortgage rate as they typically tend to pay cash.
Respondents also worked with foreign clients who sold U.S. property.
Canadians were the major sellers of U.S. owned property, accounting for 29%, followed by the United Kingdom, 8%; Brazil, 7%; Colombia, 7%, and Germany, 5%.
44% of the sold properties were in the Miami-Fort-Lauderdale-West Palm Beach area.
The median price of properties sold was $278,900.
Clients Seeking Property Abroad
19% of respondents reported they had clients―either U.S. citizens or non-U.S citizens ― who were interested in purchasing property abroad.
Clients were interested in purchasing properties in several Latin American countries such as Colombia, Costa Rica, Brazil, Mexico, Argentina, the Dominican Republic, Ecuador, and Venezuela.
Canada, Portugal, Spain, France, the United Kingdom, and the United Arab Emirates were also top countries of interest among clients seeking to purchase property abroad.
75% of respondents reported that their clients were interested in purchasing property for use as a vacation home and/or residential rental.
Cultural and Language Issues
Most respondents—67%—reported no significant issues when working with international clients, with the rest reporting “few” to “significant” problems.
About a third of respondents reported they are fluent in a language other than English and 28% reported they were born outside the United States