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First off: yikes!
Yesterday, I discovered two articles on the New York Times’ website about international buyers in the U.S. Neither feeds into the usual story line about foreign investors coming into the U.S.: that they’re just here to wave their bucks around, buy designers shoes (so cheap!), and eat at the fancy restaurants regular, urban, educated Joe six-figure still usually denies himself.
No, this time, the foreigners also have problems.
One Times story focuses on a British couple trying to buy their “dream” vacation home in Florida. “First, the interest rate on a 30-year mortgage rose from 4.9 percent to 7.9 percent. Then, the required down payment was raised — from 25 percent to 50 percent.” The other story is about higher-end investors, dropping big bucks on the most luxurious properties. While agents in some areas insist that international spending is up, the overall stats don’t usually support that thinking:
Earlier this year a study by the National Association of Realtors found the number of agents who sold a home to an international buyer actually decreased in the last year, from 18 percent to 13.3 percent.
And the dollar has strengthened in the last six months, diminishing the so-called “currency exchange discount” that helped make U.S. property a bargain for many foreign buyers. The euro was worth $1.60 in July; it has been about $1.29 recently. The British pound has dropped from $2.10 in November 2007 to around $1.59.
“The dollar has gotten stronger and that makes the investment appeal that much weaker,” said Melissa Cohn, president of Manhattan Mortgage Company.
Ms. Cohn says the number of international buyers in New York City has dropped by 50 percent in the last six months.