Similarly, Charlie Jefferson, a Philadelphia developer, was surprised when two units in a new development in the University City area, home to the University of Pennsylvania, were purchased by foreign students. "We had never seen that before," he said. "In the past we didn't see foreign students with that kind of money."
And the phlegmatic residential real estate market in Scottsdale, Ariz., reportedly is getting a boost from Canadian buyers eager to enjoy the state's dry, warm climate.
The National Assn. of Realtors found that 7.3% of the houses sold last year in Florida were bought by foreigners. Miami in particular is a magnet for buyers from throughout Latin America and Europe, helping to mitigate the fallout from the area's housing slump.
Despite the new waves of foreign buyers in many U.S. markets, few suggest international investors by themselves can offset the nation's housing crisis, brought on by the failure of many sub-prime mortgage loans made to home buyers with weak credit histories. Hammersmith Group's Valhouli said that the fact that international investors were helping to prop up some troubled housing markets only emphasized the level of stress in residential real estate.
"Relying on foreign real estate investors is fundamentally as risky as relying on sub-prime mortgages," he said, noting that both phenomena distort demand and can conceal the depths of the problem U.S. home buyers and sellers face. "Foreign buyers aren't going to save the U.S. housing market. They're just a temporary fix like a finger in the dike. Fundamentals matter."
