Editor's Note: This item is republished with permission from Inman News. View the original article, "As home prices rise, foreign interest in U.S. real estate flags."
A decline in the international share of overall house hunters in the second quarter indicates that rising U.S. home prices may be putting off foreign buyers, according to a report from real estate search and marketing site Trulia.
The report is based on all home searches on Trulia between April 1, 2012 to June 30, 2012. The share of foreign searches on Trulia fell nearly 10 percent year over year in the second quarter, with the fastest appreciating markets seeing the biggest declines in foreign interest, according to Trulia.
After years of dropping home prices nationwide, many markets seem to have found their footing. Nationally, home prices were up only slightly in June—0.3 percent on an annual basis.
"Foreigners attracted to real estate bargains get turned off when prices increase," said Jed Kolko, Trulia’s chief economist, in a statement.
"Investors want to buy when prices are at their bottom, but they’ll start to lose interest when prices rise 15 percent, as they have in Miami and Phoenix. Demand by people looking to scoop up bargains can dry up quickly when prices rise."
The share of foreign house hunters is declining even among buyers from countries that are ground zero in the European debt crisis, such as Greece, Italy, and Spain. Investors in search of a safe haven drove a rise in searches from such countries in 2011, but search activity from those countries peaked in the fourth quarter of 2011, and has fallen 15 percent since then.
Six of the 10 metro areas with the highest share of searches from abroad were in Florida—a warm weather state that saw huge price declines during the downturn. Nonetheless, recent price increases in metros like Miami and Cape Coral-Fort Myers mean some of these metros have seen less interest from overseas house hunters in the past year, Trulia said.
The top five countries represented among international house hunters were Canada, the United Kingdom, Germany, Australia, and India. For a more extensive list of popular countries of origin and U.S. cities, see the interactive graphic accompanying Trulia's report.
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