International Real Estate Report

Global Resources for Local Markets
  • NAR Investment and Vacation Home Buyers Survey
  • Insourcing Good for U.S. Real Estate Market
  • Payoff for Foreign Language Studies Different for Agents and Students
  • World View of U.S. Improving
  • When the U.S. Sneezes...the World Catches a Cold
  • Forbes Finds Growth Markets in a Softening Global Economy
  • NAR Global News Magazine Expanded
  • Don't Get Caught Unplugged When Abroad


FOREIGN INVESTMENT

NAR Investment and Vacation Home Buyers Survey
In spite of a decline in the total vacation and investment home sales, second-home sales accounted for 33% of transactions in 2007. Sales of vacation properties fell 30.6% to 740,000 in 2007 compared to the prior year which boasted a record 1.07 million, while investment-home sales fell 18.1% to 1.35 million (down from 1.65 million in 2006), according to NAR's new Investment and Vacation Home Buyers Survey report. During this same time, primary residence sales declined 10% to 4.34 million in 2007 from 4.82 million in 2006. NAR Chief Economist Lawrence Yun cited the disappearance of speculators from the market as the reason for the decline, leaving the market to serious buyers. The disruption in the mortgage market and tightening of credit during the second half of 2007 also impacted this market sector, but lifestyle factors and strong demographics (including a peak of population in their prime years for buying recreational property), point to a positive outlook for the vacation home market. While U.S. buyers may be taking a wait and see attitude, foreign buyers are taking advantage of the weak U.S. dollar and are propping up second-home sales. Conversely, Inman News reports that U.S. buyers are looking abroad for their second home investment in such markets as Costa Rica, Belize or Mexico, taking advantage of newer resort markets where prices are still relatively low and the U.S. dollar can buy more than at home. Read more about the new report or download the 2007 report on International Homebuying Activity in the U.S..


Insourcing Good for U.S. Real Estate Market
The past decade has been full of news headlines on the loss of millions of jobs moving offshore, but we hear much less about the millions more that have been created or saved by foreign companies investing in the U.S. More than 5 million people (4.4% of the American private sector workforce) are employed by companies headquartered overseas, according to the Department of Commerce. The Organization for International Investment (OII) calculates that roughly one-third of those jobs are in manufacturing, an area where the U.S. has supposedly lost its edge. Additionally, foreign-owned factories based in the U.S. export nearly $170 billion worth of goods made in this country (nearly a fifth of all U.S. exports), and these same companies reinvested a record-high $70.6 billion in their U.S. operation. OII compiles a list of the largest foreign companies operating in the U.S., based on annual reports, SEC filings and other company-provided data for 2006 (latest available data). Foreign direct investment in the U.S. jumped 88% between 2005 and 2007 to $204 billion, and further increases may be seen in 2008 given the weak dollar which makes U.S.-based operations attractive. Coupled with available inventory and softening prices, REALTORS® should look to those millions of workers who may be ready to purchase a home. OII-compiled state research reports list foreign companies located in the state, a series of state and national insourcing facts, and profiles one state-based company.


CULTURALLY CORRECT

Payoff for Foreign Language Studies Different for Agents and Students
For the 1.5 million college students studying foreign languages the payoff will vary in terms of increased pay and plum jobs, both traditional incentives for bilingualism. It's primarily a case of supply and demand. Spanish, by far the most popular foreign-language class in American colleges, results in the smallest wage premium (1.7%) bilingual job seekers, according to the Modern Language Association (MLA). Next is French with a 2.7% wage premium. Knowledge of German, Italian, Russian and Chinese is slightly more valuable, translating into an average 4% income boost. If the goal is more money, look to high-demand languages. Enrollments in Arabic spiked 127% between 2002 and 2006, and Swahili, Urdu, Farsi and Bahasa Indonesian are among the FBI's most sought after foreign language skills. REALTORS® who are bilingual have an edge when working with international clients, and unlike college students, may want to ignore the supply and demand concept and pursue the most commonly spoken languages in their market. If fluency is a stretch, remember that there's great value in picking up even a few basic conversational phrases to demonstrate interest in a specific culture. MLA offers an interactive map to visually display languages spoken in the U.S., and the MLA Data Center allows more detailed analysis of languages spoken.


World View of U.S. Improving
A new BBC World Service Poll of citizens in more than 30 countries found that the public's view of the United States has improved, but still lags behind that of other nations. The average percentage saying that the U.S. is having a positive influence increased from 31% in 2007 to 35% today while the view that it is having a negative influence declined from 52% in 2007 to 47% in 2008. Iran and Israel received the most negative ratings, followed by Pakistan, while Japan and Germany were rated most positively. Russia showed the greatest improvement in the poll. U.S. public image dropped significantly around the world in the aftermath of the 2003 invasion of Iraq. Pollsters involved in the BBC World Service project said the U.S. presidential elections appear to be behind the changing views of the United States. Read the BBC press release for methodology and more details, or download the full 25-page report (U.S. data on page 8).


GLOBAL MARKETS

When the U.S. Sneezes...the World Catches a Cold
In spite of hopes that the U.S. housing woes might be short-lived and largely maintained within national borders, the housing market slowdown is mutating into a global phenomenon with real estate prices taking a hit worldwide, according to an article in the April 14 The New York Times. Housing markets that soared over the last decade are falling back to earth, writes Mark Landler, NYT's European Economic Correspondent, citing specific problems in the UK, Spain and Ireland. Property analysts predict that some countries will face a tougher adjustment than in the U.S., including the possibility of a market collapse. This situation illustrates the how tightly the world's markets are interconnected. As home financing and credit tightens in response to the crisis that began in the U.S. subprime mortgage market, analysts worry that other countries will suffer a similar fate of mortgage defaults and foreclosures. In Western Europe the spillover is primarily through banks most directly exposed to U.S. subprime securities where faulty American mortgages are on their books. In emerging and developing economies the impact is less pronounced, but capital inflows have moderated. Market stresses have hurt currency values, notably the sharp decline in the value of the U.S. dollar since mid-2007. Citing the overall situation, the International Monetary Fund (I.M.F.) cut its forecast for global economic growth for 2008, projecting that global growth will slow 3.7% in 2008, which is .5% lower than the January forecast. The I.M.F. forecasts a modest U.S. recovery in 2009. NAR's forecast is for no growth in the first half of 2008 before moderate recovery from the second half of the year. Western Europe's market will most directly be impacted by U.S. market performance. Emerging and developing markets are projected to ease modestly this year, but largely remain robust in both 2008 and 2009. While not the first housing downturn to cross borders, its reverberations are amplified by the integration of financial markets. Achoo! Read the Executive Summary of the I.M.F.'s April World Economic Outlook, or download the complete report (303 pgs./6MB pdf).


Forbes Finds Growth Markets in a Softening Global Economy
As credit tightens around the globe causing a softening of many world markets, Forbes recently took a look at locations where real estate markets are poised for growth--not the explosive growth where prices frequently drop as quickly as they rose, but longer term growth likely to occur over the next five years, which typically makes for safer investments. To identify these emerging markets, Forbes looked at economic expansion, inflation rates, strength of individual property rights and access to lending in emerging markets. Among the top 10 real estate markets identified for growth are Tel Aviv, Israel, which after a 4% drop in prices in 2006, saw a modest 2% growth rate in 2007. This growth rate is expected to continue given the country's robust 5.1% 2007 GDP growth and a 3.8% projected growth for 2008 according to the International Monetary Fund. Malaysian capital Kuala Lumpur was also named a top growth market due to strong economic growth coupled with an inflation rate and consumer prices among the lowest in the region. Home prices in some spots in Kuala Lumpur are going for 50% to 70% above initial asking price, according to Knight Frank, with builders rushing to keep up with demand. The list of Forbes' up and coming markets was compiled based on data and from the World Economic Forum's 2007 "Global Competitiveness Report" and the World Bank Group's 2007 "Doing Business" study. Other markets on Forbes list include Colombia, Czech Republic, Morocco, South Africa, Jordan, Thailand, Chile and Peru. Read more about Forbes list and methodology.  


BUSINESS RESOURCES

NAR Global News Magazine Expanded
NAR's Global Perspectives in Real Estate quarterly magazine has been expanded to 16-pages. The magazine is automatically mailed to members of the Certified International Property Specialist (CIPS) Network as member benefit, but is available to non-Network member subscribers for an annual rate of $35. Download the subscription form. Select articles (text only format) are archived online at REALTOR.org, and can be searched by author, date or magazine feature section. The magazine includes global statistics, in-depth analysis on international real estate markets, news and data on global, economic and political trends, and also news from NAR International business, education and networking events.


Don't Get Caught Unplugged When Abroad
REALTORS® traveling abroad for business will want to avoid a possible snafu caused by the lack of an appropriate electrical convertor or adaptor to operate a laptop for a presentation or to access stored documents or email. Know the converter style needed based on your travel destination by referring to an online guide which include pictures to help confirm the right converter style for 214 countries. Travel stores are typically a good place to purchase an inexpensive set of convertors. If you'll be hosting in-bound clients or brokers with whom you hope to do business, consider purchasing a converter to accommodate their use of electrical outlets in the U.S. Even if they come fully prepared, your thoughtful gesture will be appreciated, and almost anyone can make use of an extra converter!

Report compiled by NAR International Operations, narglobe@realtors.org.

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