Foreclosure Properties Snapped Up by Foreign Bargain Hunters- By: John Cutts
Foreclosure properties in the U.S. are being snapped up by foreign buyers in bulk, according to the National Association of Realtors.
Buyers from Canada, France, Brazil, India, Mexico, Venezuela, the Netherlands and the Middle East have been entering the country to buy homes as the number of bargain-priced properties increase and as their currencies gain much leverage against the American dollar.
Since June, the American dollar has plunged by nine to eleven percent against major currencies such as the European euro, the Canadian dollar and the Japanese yen. Over the past 6 months, the Brazilian dollar gained 17 percent in value against the U.S. dollar.
Now, foreign buyers have been buying second homes or condo complexes in cash to take advantage of the weakness of the American dollar. Their purchases however signify their confidence in the eventual recovery of the American economy and its housing market.
During the one-year period ended May, a total of 154,000 houses and condo units were purchased by foreign investors, a decrease by almost 10 percent compared to investments last year, but still a high level, according to NAR.
Canadian property businessman Arthur Wong is one of foreign investors buying foreclosure properties and other distressed properties in Phoenix and Las Vegas. Wong has allocated $5 million for cash purchases and has recently bought 18 distressed condo units in Las Vegas priced at around $250,000 each during the boom years at only about $62,500 for each unit. He has also purchased 42 other condo units at steep discounts from property owners facing financial difficulties.
Wong, who heads Alberta-based investment fund Optimus U.S. Real Estate Fund, said that current real estate price levels in the U.S. are investment opportunities that come only once in a lifetime, so his company is grabbing opportunities.
NAR said that foreign investments in the U.S. real estate sector in the first half of 2009 dropped when compared to investment levels in the first half last year, but realtors said the pace of investments by foreign buyers has risen rapidly in the second half.
Most of them have been buying single-family houses and condo units in bulk at two-thirds of their price levels in 2006.
According to NAR, Florida accounts for the majority of foreign real estate investments, followed by California, Arizona and Texas. All these states, especially, Florida, California and Arizona, have been brimming with lower-priced foreclosure properties.
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John Cutts has been educated in the finer points of the foreclosure market over 5 years.