2018 Profile of International Residential Real Estate Activity in Florida

Transcription

1 2018 Profile of International Residential Real Estate Activity in Florida

2 2018 Profile of International Residential Real Estate Activity in Florida Prepared for Florida REALTORS by the National Association of REALTORS October Florida REALTORS and the NATIONAL ASSOCIATION OF REALTORS All Rights Reserved. 2

3 2018 Profile of International Residential Real Estate Activity in Florida CONTENTS 1. Introduction Highlights 6 3. Economic Environment 9 4. Foreign Investment Market..12 Market Size Origin Destination Major Buyers of Top Destinations Destination of Top Buyers Prices and Financing Intended Use of Property Type of Property Location Preference 5. Business Trends.24 International Client Transactions Reasons Client Did Not Purchase Property Source of Referrals or Leads Cultural and Language Issues 6. Appendix 28 3

4 2018 Profile of International Residential Real Estate Activity in Florida 1 INTRODUCTION 4

5 2018 Profile of International Residential Real Estate Activity Florida INTRODUCTION 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 2018 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 2017 July In this report, the year 2018 refers to the above 12- month period, and the year 2017 refers to the period of August 2016 July 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. National Association of REALTORS LAWRENCE YUN, PhD Chief Economist & Senior VP for Research GEORGE RATIU Director, Housing and Commercial Research GAY CORORATON Research Economist Florida REALTORS BRAD O CONNOR, PhD Chief Economist ERICA PLEMMONS Research Analyst Florida REALTORS, in coordination with the Miami Association of REALTORS, issued the survey invitation to about 167,000 members. A total of 7,368 members responded to the survey over the survey period of August 6 September 3. Of the respondents, 85 percent had at least one year of REALTOR membership. 5

6 2018 Profile of International Residential Real Estate Activity in Florida 2 HIGHLIGHTS 6

7 2018 Profile of International Residential Real Estate Activity in Florida HIGHLIGHTS The economic environment during the 12-month period August 2017 July 2018 presented opportunities and challenges for foreign buyers interested in purchasing U.S. residential property. The main challenge that faced both domestic and foreign buyers was the low supply of homes for sale compared to housing demand. In addition, solid employment growth coupled with interest rates still moving at historically low levels fueled strong price appreciation across Florida markets. A stronger dollar also made a home purchase more expensive for foreign buyers from Venezuela and Brazil. Size of Foreign Buyer Residential Purchases Foreign buyers purchased $22.9 billion of Florida s existing detached single-family, townhomes, and condominiums during the reference period of the 2018 survey, a five percent decline from the level during the previous 12-month period ($24.2 billion). The dollar volume of foreign buyer purchases accounted for 19 percent of Florida s volume of sales in 2018 (21 percent in 2017). Florida s foreign buyers account for a larger fraction of the dollar volume of existing home sales compared to the national share of eight percent. Measured in number of homes, foreign buyers purchased 52,000 existing homes (detached single-family, townhomes, and condominiums), a 15 percent decrease from the level reported during the previous 12-month period (61,300). This represents 13 percent of Florida s residential market (15 percent in 2017). Florida s foreign buyers account for a larger fraction of the number of homes sold compared to the national share of five percent. The 2018 median purchase price among foreign buyers increased to $286,500 ($259,400 in 2017), which is 20 percent more than the median price of Florida s existing home sales, at $236,500. Characteristics of Foreign Buyers The bulk of foreign buyers 68 percent primarily reside in another country (Type A). The share of foreign buyers in Florida outweighs the 31 percent average from a national sample. Latin American and Caribbean buyers accounted for the largest fraction of Florida foreign buyers at 36 percent. The other major buyers of real estate properties were Canadians at 22 percent, Europeans at 19 percent, and Asians at 11 percent. While foreign buyers purchased property across the state, most foreign buyers were concentrated in five metropolitan areas: Miami-Fort Lauderdale-West Palm Beach (54 percent) Orlando-Kissimmee-Sanford (nine percent) Tampa-St. Petersburg-Clearwater (nine percent) North Point-Sarasota-Bradenton (five percent) Cape Coral-Fort Myers (five percent) Most foreign buyers 67 percent made an allcash purchase (72 percent in 2017). Most foreign buyers 71 percent purchased residential property for vacation, residential rental, or for both uses (68 percent in 2017). Nationally, 37 percent of all foreign buyers purchased for these purposes. Foreign buyers had a preference for townhouses or condominium 53 percent while only 43 percent purchased a detached single-family home. Three percent purchased residential land and another three percent purchased other types of properties. Nearly half of foreign buyers purchased in a suburban or small town/rural area. Most foreign buyers 93 percent visited Florida at least once before purchasing a property. 7

8 2018 Profile of International Residential Real Estate Activity in Florida HIGHLIGHTS Interactional Client Transactions A lower fraction of Florida REALTORS respondents 41 percent worked with an international client in 2018 (44 percent in 2017). Nationally, 23 percent of REALTORS worked with a foreign client. A lower fraction of respondents 23 percent reported an increase in their business that is international in the past year (26 percent in 2017). A lower fraction of respondents 30 percent reported an increase in their business that is international in the past five years (33 percent in 2017). A lower fraction of respondents 34 percent expect an increase in their international transactions in the next 12 months (37 percent in 2017). The fraction of respondents who reported that their client found Florida s home prices to be less expensive than the prices in their home country decreased to 35 percent (41 percent in 2017). Cost of property, could not find property, and exchange rate were the major reasons why international clients decided not to purchase. Sixty-eight percent of foreign clients were personal or business contacts or former clients. Most respondents 60 percent reported no significant issues when working with international clients. Seventy-five percent of respondents were born in the United States, and 34 percent were fluent in a language other than English. 8

9 2018 Profile of International Residential Real Estate Activity in Florida 3ECONOMIC ENVIRONMENT 9

10 B R A Z I L R E A L / U S $ R U P E E / U S $ N E W P E S O / U S $ C A N A D I A N $ / U S $ Y U A N / U S $ P O U N D / U S $ E U R O / U S $ B O L I V A R / U S $ % -6% -8% 5% 36% Jan/2006 Oct/2006 Jul/2007 Apr/2008 Jan/2009 Oct/2009 Jul/2010 Apr/2011 Jan/2012 Oct/2012 Jul/2013 Apr/2014 Jan/2015 Oct/2015 Jul/2016 Apr/2017 Jan/ Profile of International Residential Real Estate Activity in Florida ECONOMIC ENVIRONMENT Macroeconomic and political conditions in the United States and abroad created both opportunities and challenges for foreign buyers. These factors affected the desirability and affordability of purchasing a property in the United States, specifically in Florida. Cultural affinity, social and family relations, and personal preferences were also major considerations when deciding to purchase property. U.S. Home Prices and Supply $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 M E D I A N H O M E P R I C E S A N D M O N T H S S U P P LY O F E X I S T I N G H O M E S $269, Home prices in the United States and in Florida continued to be bolstered by housing demand that outpaced the supply of homes for sale. The inventory of existing homes for sale in the U.S. is equivalent to about four months of the current monthly sales pace, well below the normal level of six months. Rising prices make a home purchase less affordable for domestic and foreign buyers alike. Exchange Rate During most of the period August 2017 July 2018, the dollar weakened against the Canadian dollar, British pound, euro, Chinese yuan, and Mexican peso. The dollar strengthened against the Brazilian real and the Venezuelan bolivar which was devalued in July 2018 ( from 0.84 to 1.3 per USD) and then again in August 2018 ( to 24.9 per USD). A weaker dollar means that foreign buyers spend less of their local currency to purchase U.S. property. Source: NAR Median Price, Existing Homes Sold in the U.S. Months' Supply AVERAGE YEAR-TO-YEAR CHANGE OF THE VALUE OF THE U.S. DOLLAR AGAINST LOCAL CURRENCIES DURING AUGUST 2017 JULY

11 Dec/2005 Sep/2006 Jun/2007 Mar/2008 Dec/2008 Sep/2009 Jun/2010 Mar/2011 Dec/2011 Sep/2012 Jun/2013 Mar/2014 Dec/2014 Sep/2015 Jun/2016 Mar/2017 Dec/ Profile of International Residential Real Estate Activity in Florida ECONOMIC ENVIRONMENT Oil Prices Oil prices have started climbing up following the global cutback in oil production led by Saudi Arabia in early 2017 to lift sagging oil prices. The spot price for West Texas Intermediate has increased to nearly $70 per barrel in August 2018, from a low of $30/barrel in February Rising oil prices benefit oil exporters, including countries where U.S. and Florida s foreign buyers come from, such as Canada, Venezuela, Brazil, Mexico, Russia, and the United Arab Emirates. Economic Growth Rising economic growth improves the spending capability of foreign buyers to purchase a property. Economic growth was sustained or accelerated in countries where most U.S. foreign buyers come from. China and India were the fastest growing economies in 2017, growing at six to seven percent. Canada s economy rose three percent, while Latin America and the Caribbean region climbed out of a recession, as oil prices started climbing back after OPEC countries agreed to cut back oil production in late $160 $140 $120 $100 $80 $60 $40 $20 $0 W E S T T E X A S I N T E R M E D I AT E S P O T P R I C E I N U. S. D O L L A R S P E R BA R R E L $31 $68 Economic growth picked up in the Euro area under accommodative monetary policy. However, growth continued to taper in the United Kingdom in the wake of its decision to exit from the European Union by Global economic growth rose to 3.8 percent in 2017, and growth is expected to be sustained in 2018 and 2019 at an annual pace of 3.9 percent. The United States economy has been expanding at a strong pace and creating about two million jobs annually GDP GROWTH RATES Projection 2019 Projection Source: IMF, April 2018 World Economic Outlook 11

12 2018 Profile of International Residential Real Estate Activity in Florida 4FOREIGN INVESTMENT MARKET 12

13 3 30% 3 69% 70% 68% 2018 Profile of International Residential Real Estate Activity in Florida FOREIGN INVESTMENT MARKET Size of Foreign Buyer Market During August 2017 July 2018, foreign buyers purchased $22.9 billion of Florida s existing homes, a five percent decline from the previous 12-month level ($24.2 billion). The dollar volume of foreign buyer purchases accounted for 19 percent of Florida s existing home sales (21 percent in 2017). Florida s foreign buyer share to dollar volume of homes sold is about twice the national foreign buyer share of 10 percent. Foreign buyers purchased 52,000 existing homes, a 15 percent decrease from the previous 12-month level (61,300). Foreign buyer purchases were 13 percent of Florida s existing home sales (15 percent in 2017). Nationally, foreign home buyer home comprised five percent of existing home sales. Foreign buyers whose primary residence is in another country (Type A) made up 68 percent of Florida s foreign buyers compared to 39 percent nationally. DOLLAR VOLUME OF INTERNATIONAL SALES IN BILLION DOLLARS $17.1 $17.3 $17.4 $14.5 $15.7 $23.7 $19.4 $24.2 $ NUMBER OF INTERNATIONAL SALES IN THOUSAND UNITS TYPE OF FOREIGN BUYERS FOREIGN BUYER SHARE TO EXISTING HOME SALES % % 19% 19% % 19% 1 N O N - R E S I D E N T ( T Y P E A ) R E S I D E N T ( T Y P E B ) As Percent of Florida's Home Sales As Percent of Dollar Volume 13

14 2018 Profile of International Residential Real Estate Activity in Florida FOREIGN INVESTMENT MARKET Origin of Foreign Buyers Latin American and Caribbean buyers accounted for the largest fraction of Florida s foreign buyers at 36 percent, followed by Canadians at 22 percent, Europeans at 19 percent, and Asians at 11 percent. Respondents reported they did not know the country of origin of 11 percent of their buyers. The share of Latin American and Caribbean buyers appears to have recovered somewhat, to 36 percent, mainly due to Brazilian buyers, which may be associated with the recovery of world oil prices. The share of buyers from North America (Canada) was unchanged as the Canadian dollar strengthened against the U.S. dollar and oil prices rebounded. The share of European buyers to Florida s foreign buyers has been trending downwards since 2016, and this may be associated with the uncertainty about the trend of income and employment in Britain following its decision to leave the European Union by The share of Asian buyers has been on the uptrend, led by the rise in Chinese purchases. Most Chinese buyers reside in the U.S. under temporary visas or are recent immigrants, and these buyers are less likely to be impacted by the tightening of controls on dollar outflows from China Mainland. 60% ORIGIN OF FOREIGN BUYERS 50% 40% 36% 30% 20% 0% 1 19%

15 5% 5% 5% 5% 9% Profile of International Residential Real Estate Activity in Florida FOREIGN INVESTMENT MARKET Origin of Foreign Buyers The top buyers were Canada (22 percent), Brazil (nine percent), the United Kingdom (five percent), Venezuela (five percent), Colombia (five percent), and China (five percent). The share of Chinese buyers has increased since 2009 when they accounted for a mere one percent. Chinese buyers now account for five percent of Florida s buyers. Among Latin American buyers, Brazilians made up a higher fraction of Florida s foreign buyers while buyers from Venezuela and Mexico took up smaller shares. Foreign buyers from Mexico seemed to have stepped back, accounting for less than one percent compared to past years share of two percent. The share of Venezuelan buyers also decreased as Venezuela remains mired in a severe political and economic crisis. Argentina remained as a major origin of foreign buyers, but its share in 2018 was lower than the Chinese share. European buyers from the United Kingdom, Germany, and France each made up a smaller fraction of all foreign buyers. FLORIDA'S MAJOR FOREIGN BUYERS 45% 40% 35% 30% 25% 20% 15% 5% 0% Canada Brazil Venezuela United Kingdom Colombia China Germany Argentina % 5% 15% 5% % 15% 5% % 8% 5% % 5% 5% % 6% 8% 6% 5% 6% % 6% 5% % 18% 5% % 9% 8% 6% 5% 6% % 6% 5% 5% % 5% 5% 5% 5% 15

16 39% % Profile of International Residential Real Estate Activity in Florida FOREIGN INVESTMENT MARKET Origin of Foreign Buyers Among the major foreign buyers, more than half of foreign buyers primarily resided abroad (Type A), except for Chinese buyers, where Type A buyers accounted for 39 percent. SHARE OF NON -RESIDENT (TYPE A) FOREIGN BUYERS Destination of Foreign Buyers While foreign buyers purchased property across the state, most foreign buyers were concentrated in Miami-Fort Lauderdale-West Palm Beach (54 percent), Orlando-Kissimmee-Sanford (nine percent), Tampa-St. Petersburg-Clearwater (nine percent), North Point-Sarasota-Bradenton (five percent), and Cape Coral-Fort Myers (five percent). Miami-Fort Lauderdale-West Palm Beach had the largest share of foreign buyers, more than twice its market share of Florida s closed sales during this period (24 percent). DESTINATION OF FLORIDA'S FOREIGN BUYERS Miami-Fort Lauderdale-W Palm Beach Orlando-Kissimmee-Sanford Tampa-St.Petersburg-Clearwater North Port-Sarasota-Bradenton Cape Coral-Fort Myers Naples-Immokalee-Marco Island Jacksonville Port St. Lucie Palm Bay-Melbourne-Titusville Lakeland-Winter Haven Deltona-Daytona Beach-Ormond Beach 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 10.8% % 9.0% % % % 2.5% 1.8% 2.0% 1.5% % 1.6% Other metro areas each account for one percent or less of the destination of foreign buyers. 52.6%

17 2018 Profile of International Residential Real Estate Activity in Florida FOREIGN INVESTMENT MARKET Destination of Foreign Buyers Miami-Fort Lauderdale-West Palm Beach, Orlando- Kissimmee-Sanford, and Palm Bay- Melbourne-Titusville foreign buyers were largely from Latin American and the Caribbean. North Point-Sarasota-Bradenton, Cape Coral-Fort Myers, Naples-Immokalee-Marco Island, Lakeland-Winter Haven, and Port St. Lucie foreign buyers were mainly from Canada and Europe. Jacksonville foreign buyers were mainly from Asia and Latin American. Tampa-St. Petersburg-Clearwater had a mix of buyers. ORIGIN OF FOREIGN BUYERS IN FLORIDA'S METRO AREAS M I A M I - F O R T L A U D E R D A L E - W P A L M B E A C H 16% 48% 20% 6% O R L A N D O - K I S S I M M E E - S A N F O R D 15% 18% 4 8% TAMPA-ST.PETERSBURG - C L E A R W A TER 1 29% 16% 25% 15% N O R T H P O R T - S A R A S O T A - B R A D E N T O N 6% 3 4 C A P E C O R A L - F O R T M Y E R S 29% 1 50% N A P L E S - I M M O K A L E E - M A R C O I S L A N D % J A C K S O N V I L L E 39% 2 8% 2 P A L M B A Y - M E L B O U R N E - T I T U S V I L L E 15% 26% % P O R T S T. L U C I E 15% L A K E L A N D - W I N T E R H A V E N 8% Asia/Oceania Europe Latin America and the Caribbean Africa North America Unknown 17

18 2018 Profile of International Residential Real Estate Activity in Florida FOREIGN INVESTMENT MARKET Major Buyers of Top Florida Destinations M A J O R F O R E I G N B U Y E R S I N M I A M I - F O R T L A U D E R D A L E - W E S T P A L M B E A C H Canada Brazil Colombia Venezuela China Argentina United Kingdom Chile Dominican Republic Germany Ecuador France Peru India Russian Federation Trinidad and Tobago 1 20% M A J O R F O R E I G N B U Y E R S I N O R L A N D O - K I S S I M M E E - S A N F O R D Brazil Canada Venezuela China Colombia United Kingdom Argentina Dominican Republic Bolivia France Russian Federation 8% 8% 20% M A J O R F O R E I G N B U Y E R S I N T A M P A - S T. P E T E R S B U R G - C L E A R W A T E R M A J O R F O R E I G N B U Y E R S I N N O R T H P O I N T - S A R A S O T A - B R A D E N T O N Canada United Kingdom China Venezuela Germany Iran Italy Mexico 1 25% Canada United Kingdom China Brazil France Germany Hungary Ireland Romania Russian Federation Switzerland 1 4 M A J O R F O R E I G N B U Y E R S I N N A P L E S - I M M O K A L E E - M A R C O I S L A N D Canada Germany Argentina China Colombia Switzerland United Kingdom 1 4 M A J O R F O R E I G N B U Y E R S I N J A C K S O N V I L L E India 1 Canada 8% China 8% Colombia 8% Cuba 5% Israel 5% M A J O R F O R E I G N B U Y E R S I N C A P E C O R A L - F O R T M Y E R S M A J O R F O R E I G N B U Y E R S I N P O R T S T. L U C I E Canada Germany Brazil Switzerland China Sweden United Kingdom 6% 1 50% Canada Austria China Brazil Finland France Germany Malaysia United Arab United Kingdom Venezuela 3 18

19 2018 Profile of International Residential Real Estate Activity in Florida FOREIGN INVESTMENT MARKET Destinations of Florida s Top Foreign Buyers DESTINATIONS OF CANADIAN BUYERS DESTINATIONS OF BRAZILIAN BUYE RS Miami-Fort Lauderdale-W Palm Beach Cape Coral-Fort Myers Tampa-St.Petersburg-Clearwater North Port-Sarasota-Bradenton Naples-Immokalee-Marco Island Orlando-Kissimmee-Sanford Port St. Lucie Deltona-Daytona Beach-Ormond Beach Punta Gorda Sebastian-Vero Beach Lakeland-Winter Haven Jacksonville Palm Bay-Melbourne-Titusville Other FL County 9% 48% Miami-Fort Lauderdale-W Palm Beach Orlando-Kissimmee-Sanford Cape Coral-Fort Myers Palm Bay-Melbourne-Titusville North Port-Sarasota-Bradenton Lakeland-Winter Haven Tampa-St.Petersburg-Clearwater Crestview-Fort Walton Beach-Destin Naples-Immokalee-Marco Island Jacksonville Port St. Lucie Deltona-Daytona Beach-Ormond Beach Sebastian-Vero Beach Other FL County 20% 65% DESTINATIONS OF UNITED KINGDOM BUYERS DESTINATIONS OF COLOMBIAN BUYERS Miami-Fort Lauderdale-W Palm Beach Tampa-St.Petersburg-Clearwater Orlando-Kissimmee-Sanford North Port-Sarasota-Bradenton Lakeland-Winter Haven Deltona-Daytona Beach-Ormond Beach Naples-Immokalee-Marco Island Cape Coral-Fort Myers Palm Bay-Melbourne-Titusville Punta Gorda Port St. Lucie Ocala Tallahassee Homosassa Springs The Villages 29% 2 1 9% 5% Miami-Fort Lauderdale-W Palm Beach Orlando-Kissimmee-Sanford Naples-Immokalee-Marco Island Jacksonville Tampa-St.Petersburg-Clearwater Deltona-Daytona Beach-Ormond Beach Palm Bay-Melbourne-Titusville Lakeland-Winter Haven Ocala Other FL County 1 70% DESTINATIONS OF CHINESE BUYERS DESTINATIONS OF VENEZUELAN BUYE RS Miami-Fort Lauderdale-W Palm Beach Orlando-Kissimmee-Sanford Tampa-St.Petersburg-Clearwater North Port-Sarasota-Bradenton Jacksonville Gainesville Naples-Immokalee-Marco Island Cape Coral-Fort Myers Port St. Lucie Deltona-Daytona Beach-Ormond Beach Palm Bay-Melbourne-Titusville Homosassa Springs Punta Gorda 1 8% 50% Miami-Fort Lauderdale-W Palm Beach Orlando-Kissimmee-Sanford Tampa-St.Petersburg-Clearwater North Port-Sarasota-Bradenton Palm Bay-Melbourne-Titusville Ocala Cape Coral-Fort Myers Port St. Lucie Lakeland-Winter Haven Sebring 15% 66% 19

20 $225,000 $375,000 $364,951 $397,175 $325,000 $403,865 $275,000 $275,000 $307,429 $225,000 $614,355 $540, Profile of International Residential Real Estate Activity in Florida FOREIGN INVESTMENT MARKET Prices and Financing The median purchase price among foreign buyers increased to $286,500 ($259,400 in 2017). The foreign buyer median price was 20 percent higher than the median price of Florida s existing home sales, at $236,500. Florida s foreign buyers typically spent less for a home purchase compared to all U.S. foreign buyers. With prices still rising, 71 percent of foreign buyers purchased properties of $500,000 or less, slightly lower than in 2017 (81 percent). Among the major buyers, buyers from Brazil and China typically purchased more expensive properties, with the median purchase price at above $300,000. Canadian and Venezuelan buyers typically purchased less expensive properties, with the median purchase price at below $250,000. $350.0 $300.0 $250.0 $200.0 $150.0 $100.0 $50.0 MEDIAN PURCHASE PRICE $286.5 $236.5 MEDIAN PURCHASE PRICE AMONG FLORIDA AND U.S. FOREIGN BUYERS $277.4 $252.5 $302.3 $259.4 $292.4 $286.5 $0.0 FL Existing Home Sales Foreign Buyers U.S. Foreign Buyers Florida Foreign Buyers AVERAGE AND MEDIAN PURCHASE PRICE AMONG FLORIDA'S MAJOR FOREIGN BUYERS B R A Z I L C A N A D A C H I N A C O L O M B I A U N I T E D K I N G D O M V E N E Z U E L A Mean Median 20

21 15% 15% % 2 20% % 28% 35% Profile of International Residential Real Estate Activity in Florida FOREIGN INVESTMENT MARKET Prices and Financing Sixty-seven percent of foreign buyers made an allcash purchase, a decline compared to the previous 12-month share (72 percent). FINANCING The majority of Florida s foreign buyers primarily resided abroad (Type A). These buyers tend to make an all-cash purchase because it is more convenient given the documentation required in obtaining a U.S. mortgage. Among the major foreign buyers, Canadian and U.K. buyers were the most likely to make an all-cash purchase, with more than 80 percent of buyers paying all-cash. Most Canadian and U.K. buyers primarily resided abroad and purchased Florida property for vacation use. Intended Use of Property Most foreign buyers 71 percent purchased residential property for vacation, residential rental, or for both uses (68 percent in 2017). Nationally, 37 percent of all foreign buyers purchased for these purposes. INTENDED USE OF RESIDENTIAL PROPERTY 3 60% FINANCING AMONG FLORIDA'S MAJOR FOREIGN BUYERS % 5 19% 8 36% 5 V A C A T I O N H O M E B O T H V A C A T I O N A N D R E N T A L S T U D E N T U S E D O N ' T K N O W All Cash Home Country Mortgage Don't Know U.S. Mortgage Investors/Other 21

22 1 1 39% 38% % Profile of International Residential Real Estate Activity in Florida FOREIGN INVESTMENT MARKET Intended Use of Property Buyers from Canada and the United Kingdom were more likely to purchase a vacation property. Type of Property Forty-three percent of foreign buyers bought a townhouse or condominium, a slight decrease from the share in 2017 (46 percent). Nationally, only 29 percent of foreign buyers purchased these types of properties. INTENDED USE AMONG FLORIDA'S MAJOR FOREIGN BUYERS 26% 1 19% 3 15% 65% 26% 1 38% 9% % 16% 15% More than half of buyers from China and the United Kingdom purchased detached singe-family homes. Vacation Home Both Vacation and Rental Student Use Don t Know Residential Rental Primary Residence Other TYPE OF RESIDENTIAL PROPERTY RESIDENTIAL PROPERTY PURCHASES OF FLORIDA'S MAJOR FOREIGN BUYERS 4 49% 9% 6% 46% 4 19% 2 55% % 6 8% 40% Other Residential Land Condominium or Cooperative Townhouse Detached single-family 22

23 8% 8% 6% 1 5% 6% 5% % 19% 1 19% 26% 29% 26% Profile of International Residential Real Estate Activity in Florida FOREIGN INVESTMENT MARKET Location Preference Seventy-four percent of foreign buyers purchased in a central city/urban area or in a suburban area, with the share split at 37 percent. Meanwhile, 15 percent purchased in a resort area, a decline from the 33 percent share in 2008; this is consistent with the declining share of Canadian and U.K. buyers, from 50 percent in 2008 to 27 percent currently. LOCATION PREFERENCE 3 30% 3 25% 2 25% 19% 1 15% 15% 1 8% 6% 8% 5% 30% 36% % % 39% Buyers from Venezuela and Colombia preferred a central city/urban area, mostly purchasing property in Miami Dade-Fort Lauderdale-West Palm Beach and Orlando-Kissimmee-Sanford. 29% 26% 35% 39% 30% 26% 4 40% 35% 3 Ninety-three percent of foreign buyers had visited Florida before purchasing a property, the same share in Central city/urban Small town/rural Suburban Resort NUMBER OF TIMES INTERNATIONAL CLIENT VISITED FLORIDA BEFORE PURCHASING A PROPERTY 16% % 39% 4 LOCATION PREFERENCE AMONG MAJOR FOREIGN BUYERS 38% 49% 26% 19% 8% 6% 4 45% 19% 20% 39% 2 6% 35% 56% T O T O 10 M O R E T H A N 10 Central City/Urban Small Town/ Rural Suburban Resort 23

24 2018 Profile of International Residential Real Estate Activity in Florida 5BUSINESS TRENDS 24

25 16% % % 2 36% 3 36% % 4 49% 26% 26% % 26% 5 48% Profile of International Residential Real Estate Activity in Florida BUSINESS TRENDS International Client Transactions A lower fraction of Florida REALTORS respondents 41 percent worked with an international client in 2017 (44 percent in 2017). Nationally, 23 percent of REALTORS worked with a foreign client. RESPONDENTS WHO HAD AN INTERNATIONAL CLIENT IN THE PAST YEAR % 48% % 2 28% 28% % 35% 3 29% 2 A lower fraction of respondents 23 percent reported an increase in their business that is international in the past year (26 percent in 2017) U.S. Survey Florida Survey A lower fraction of respondents 30 percent reported an increase in their business that is international in the past five years (33 percent in 2017). CHANGE IN THE PERCENTAGE OF CLIENTS WHO ARE INTERNATIONAL IN THE PAST YEAR A lower fraction of respondents 34 percent expect an increase in their international transactions in the next 12 months (37 percent in 2017). I N C R E A S E D S T A Y E D A B O U T T H E S A M E D E C R E A S E D OUTLOOK ABOUT INTERNATIONAL CLIENT TRANSACTIONS IN THE NEXT 12 MONTHS CHANGE IN THE PERCENTAGE OF CLIENTS WHO ARE INTERNATIONAL IN THE PAST FIVE YEARS D E C R E A S E R E M A I N T H E S A M E I N C R E A S E D O N ' T K N O W I N C R E A S E D S T A Y E D A B O U T T H E S A M E D E C R E A S E D

26 % % % 2018 Profile of International Residential Real Estate Activity in Florida BUSINESS TRENDS Reasons Client Did Not Purchase Property FLORIDA REAL ESTATE PRICES COMPARED TO HOME COUNTRY The fraction of respondents who reported that their client found Florida s home prices to be less expensive than the prices in their home country decreased to 35 percent (41 percent in 2017). Given tight supply conditions and rising prices, cost of property, could not find property, and exchange rate were the major reasons why international clients decided not to purchase a property. L E S S E X P E N S I V E T H A N P R I C E S I N T H E H O M E C O U N T R Y A B O U T T H E S A M E A S P R I C E S I N H O M E C O U N T R Y M O R E E X P E N S I V E T H A N P R I C E S I N T H E H O M E C O U N T R Y D O N T K N O W REASONS CLIENT DID NOT PURCHASE PROPERTY Cost of property 1 15% Could not find a property to purchase 1 1 Exchange rate 1 1 Condo/maintenance fees Could not obtain financing 8% Immigration laws Can not move money Property taxes 5% 6% Exposure to U.S. tax laws 5% 5% Insurance costs Loss of home country benefits Don't know 5% 6% Other 9%

27 % % 36% 3 39% Profile of International Residential Real Estate Activity in Florida BUSINESS TRENDS Source of Leads or Referrals Sixty-eight percent of foreign clients were personal or business contacts or former clients. Among respondents who reported an online lead, the respondents own website or social media platform and aggregators websites were the primary sources of online leads. SOURCE OF REFERRALS OR LEADS ON FLORIDA'S FOREIGN BUYERS Cultural and Language Issues Most respondents 60 percent reported no significant issues when working with international clients. Seventy-five percent of respondents were born in the United States, and 34 percent were fluent in a language other than English. CULTURAL OR LANGUAGE BARRIERS 25% 29% 2 35% % 29% 3 35% 36% Personal Contacts Referred by Previous Client Was a Former Client Website/Internet Organic Search Walk-in/Open House/Phone Call Website/Internet (Paid Ad) U.S. Business Contact Sings/Ads on Boards or Yard Outside U.S. Business Contact Other 1 6% 2 28% 7 66% 7 59% % 6 60% Have Not Had Problems A Few Problems Significant Problems Aggregators SOURCE OF ONLINE LEADS 3 PERCENT OF FLORIDA REALTOR RESPONDENTS WHO ARE FLUENT IN A LANGUAGE OTHER THAN ENGLISH Own 3 Firm 1 Other Brokers 5% Local MLS Other Sources Don t Know 27

28 2018 Profile of International Residential Real Estate Activity in Florida 6 APPENDIX 28

29 2018 Profile of International Residential Real Estate Activity in Florida APPENDIX Appendix 1 Computation of Residential Purchases of Foreign Buyers in Florida for the 12-Month Period August 2017 July 2018 Line Florida's Foreign Buyer Residential Purchases 1 Total U.S. Foreign Buyer Residential Purchases 266,800 2 Florida's Share to U.S. Foreign Buyer Residential Purchases (units) 19% 3 Number of Florida Foreign Buyer Residential Purchases 52,000 4 Average Price of Florida Foreign Buyer Residential Purchases $441,300 5 Dollar Volume of Foreign Buyer Residential Purchases in Florida $22,947,600,000 Florida's Residential Market for Existing Homes 6 Florida's Residential Dollar Volume (Single-Family, Condo/Townhomes) $123,781,992,466 7 Florida's Closed Sales (Single-Family, Condo/Townhomes) 398,169 8 Share of Dollar Volume of Foreign Buyer Purchases to Florida's Dollar Volume of Closed Sales 1 9 Share of Foreign Buyer Purchases to Florida's Closed Sales 19% Notes: Line 1 Source: NAR's 2018 Profile of International Activity in U.S. Residential Real Estate Line 2 Source: NAR's 2018 Profile of International Activity in U.S. Residential Real Estate Line 3 Mutiply Lines 1 and 2 Line Profile of International Residential Activity in Florida Line 5 Mutiply Lines 3 and 4 (Sales = # of units x mean price) Line 6 Dollar volume of closed sales for single-family homes, condominiums, and townhomes. Source of data: Florida Realtors Line 7 Closed sales for single-family homes, condominiums, and townhomes. Source of data: Florida Realtors Line 8 Divide Line 5 by Line 6. Line 9 Divide Line 3 by Line 7. 29

30 2018 Profile of International Residential Real Estate Activity in Florida