Foreign Buyer Rankings: The report covers the period from April 2022 to March 2023 and reveals that Texas clinched the coveted third spot among the hottest markets for foreign buyers in the U.S. During this time, 11.7% of the homes sold in Texas were purchased by international buyers. Texas follows California, which stands at the second spot with 12.2% and Florida, leading the pack with 23% of homes sold to foreign buyers.
Type A and Type B Buyers: The report classifies foreign buyers into two categories: Type A and Type B. Type A includes non-resident individuals who do not live in the U.S., while Type B comprises resident individuals who are non-U.S. citizens or have been in the U.S. for less than two years at the time of the transaction.
Breakdown of International Buyers: Type B buyers, the resident non-U.S. citizens living in the United States, make up the majority of international buyers in Texas, accounting for 61% of the total. So, where are these buyers coming from? Here's the breakdown:
- 41% from Mexico
- 5% from Venezuela
- 5% from Nigeria
- 7% from India
- 8% from China
These statistics reveal the diverse origins of international buyers, with a considerable number hailing from various countries. Interestingly, the Fenton Grossman Group has witnessed a surge in inquiries from international buyers looking to move to Austin from these very nations.
Affordability and Property Types: One of the major factors driving international buyers to Texas is affordability. With a median sales price of just over $320,000, Texas offers more budget-friendly options compared to high-priced markets like California, Florida, or New York. This affordability, coupled with the absence of state income tax, makes Texas an attractive destination for foreign investors.
Furthermore, the report highlights that 49% of international buyers in the U.S. pay for their homes in cash. This can expedite the buying process and potentially result in better deals for cash buyers, as they can avoid the complexities associated with mortgages.
Property preferences among international buyers show that 51% purchase primary residences, 18% invest in rental properties, and 10% acquire vacation homes. This indicates a wide range of interests within the international buyer community.
Housing Types and Location: A significant 76% of homes purchased by international buyers in Texas are single-family detached homes. These properties are often found in suburban areas, including master-planned communities. Half of these buyers opt for suburban living, with areas like Cedar Park, Leander, Pflugerville, and Liberty Hill being popular choices. However, the real estate market in the southern suburbs, including Buda, Kyle, Dripping Springs, San Marcos, and New Braunfels, is also experiencing a substantial uptick.
Challenges for International Buyers: Not every international buyer ends up making a purchase in Texas. The report indicates that 36% decided not to buy due to the perceived high cost of properties, while 34% couldn't find a property that suited their preferences. Another 24% faced challenges in obtaining financing, emphasizing the importance of securing mortgage pre-approval before embarking on the home-buying journey.
Property Taxes and Financial Guidance: Texas is known for its property taxes, which can come as a shock to many buyers. These taxes can significantly impact the overall cost of homeownership, so it's crucial for international buyers to seek guidance from local experts who understand the nuances of the Texan real estate market. Trusted realtors and lenders can provide a clear picture of the financial aspects of buying a home in Texas.
Why Texas? The lingering question is: why are international buyers choosing Texas over other states? Several factors contribute to this trend. Economic opportunities, job growth, no state income tax, and affordability are among the top reasons. Additionally, Texas offers a high quality of life, with over 300 sunny days per year, mild winters, and diverse outdoor activities. The state's booming economy and overall appeal make it a magnet for international buyers seeking both investment and lifestyle opportunities.
Conclusion: The Texas real estate market is thriving, and international buyers are playing a significant role in this growth. Texas's affordability, job opportunities, and quality of life make it an attractive destination for foreign investors. However, international buyers should be prepared for the unique challenges of the Texan market, such as property taxes, and seek guidance from experienced professionals in the field. Texas's status as the third hottest market for international buyers is a testament to its enduring appeal and economic vitality. If you're an international buyer considering a move to Texas, the Lone Star State has much to offer, both in terms of real estate opportunities and a vibrant lifestyle.
