June 20th, 2014
House hunters from around the globe who are looking to get their hands on a prime piece of U.S. real estate are starting to favor urban areas over vacation spots.
Online real estate marketplace Trulia recently reported that between January and May, 4.0 percent of searches on the site originated from outside the U.S., a slight decline from 4.2 percent a year ago. Of that share, 4.7 percent were in vacation areas, which are zip code tabulation areas (ZCTAs) where a minimum of 25 percent of homes are for occasional or seasonal use. Meanwhile, 9.4 percent were in the densest urban neighborhoods, which are ZCTAs with at least 5,000 housing units per square mile. Not only are urban properties netting more interest from international house hunters, searches for these homes are increasing in 2014 as attraction to vacation spots decreases.
“Foreign interest in U.S. real estate remains highly concentrated in mostly urban neighborhoods, particularly in Miami, Los Angeles and New York, and is increasingly shifting toward high-density urban areas and away from vacation spots,” said Jed Kolko, Trulia’s chief economist.
Variation among countries of origin
The trend of U.S. urban areas becoming more popular among international homebuyers isn’t as prevalent among all house hunters. Brazilians, for example, who account for 4.1 percent of all foreign searches in 2014 so far, tend to look for homes in the city. Twenty-five percent of foreign searches in urban areas were conducted by Brazilian house hunters, while that group only have accounted for 6 percent of vacation spot searches. French, Italian, Russian and Australian buyers also have this preference.
Canadians, on the other hand, have a more even balance. They have accounted for 18.5 percent of all searches so far this year, the highest of any country. Eleven percent of their searches are in areas where people go to relax, representing the most interest in vacation spots among all foreign homebuyers. Thirteen percent are searches for urban properties.
Miami is the top urban destination
Among the densest cities that appeal to international house hunters, Miami is the most popular. The Florida city, which had a median home value of $271,200 as of June 19, according to Zillow, has netted 16 percent of all foreign searches in 2014 so far. Los Angeles was not far behind, accounting for 14.5 percent of those searches.