As we see the mortgage and real estate industries go through tough times (with thousands of homes falling into foreclosure) we can only hope that any money made from this disaster will at least stay in this country. Many investors are pouring millions into buying these foreclosures, often at fifty cents on the dollar. One would like to think those billions in future profits will remain here in the U.S., but unfortunately that’s often not the case.
According to a new study by the National Association of Realtors, about one in five American real estate agents sold a second home in the year ending April 2007 to a foreign buyer (defined as someone who has legally entered the United States to buy a home). A quarter of the agents surveyed said their business with overseas buyers had increased over the past five years. The study also showed that international buyers are spending more freely on houses than Americans are. The median price they paid was $299,500, compared to $221,900 for native-born buyers.
Many homes in foreclosure have gotten the attention of foreign investors, and many cities have major surpluses of foreclosures to offer them. Detroit is one such city that appears to be in a real crises; roughly 4.9 percent of the households in the Detroit metro area were in some stage of foreclosure in 2007, which is 4.8 times the national average; according to the study released by mortgage research company RealtyTrac Inc.
Stockton, Calif., ranked second with about 4.8 percent of its households in some stage of foreclosure, while the Las Vegas metro area was third with a 4.2 percent rate. In all, 72,616 filings on 41,273 properties were reported in the Detroit metro area, which includes Livonia and Dearborn. The foreclosure rate represents a 68 percent jump from 2006.
In Stockton, 22,184 foreclosure filings were reported on 10,608 properties last year, up 271 percent from 2006, RealtyTrac said.. The Riverside-San Bernardino metro area east of Los Angeles was ranked fourth, with 102,506 filings on 51,739 homes, a rate of 3.8 percent. Sacramento was ranked fifth, with 3.1 percent of its households reporting late payments.
The other California metropolitan areas in the top 20 were Bakersfield, ranked seventh; Fresno, ranked 14th; and Oakland at 16th. The Las Vegas metro area, which also includes Paradise, Nev., reported a total of 59,983 foreclosure filings on 30,375 properties in 2007.
Ohio, which has also been racked by high unemployment, had four metro areas among the top 20, including Akron at 12th, Dayton at 15th and Toledo at 19th. The metro area comprising Cleveland, Lorain, Elyria and Mentor was ranked sixth, with some 2.9 percent of all households in some stage of foreclosure. Miami ranked eighth with a 2.7 percent rate, the highest among all metro areas in Florida. Fort Lauderdale was 10th and Orlando was 20th. The other areas in the top 20 were Denver-Aurora, Colo., at No. 9; Atlanta-Sandy Springs-Marietta, Ga., at No. 11; Memphis, Tenn., at No. 13; and Indianapolis at No. 18.
Buying up U.S. Companies
Last year, foreign investors poured a record $414 billion into securing stakes in American companies, factories and other properties through private deals and purchases of publicly traded stock, according to Thomson Financial, a research firm. That was up 90 percent from the previous year and more than double the average for the last decade. It amounted to more than one-fourth of all announced deals for the year.
During the first two weeks of this year, foreign businesses agreed to invest another $22.6 billion for stakes in American companies – more than half the value of all announced deals. If a recession now unfolds and the dollar drops further, the pace could accelerate.
So I would urge our U.S investors (small and large) to get out and take advantage of the incredible real estate and business opportunities currently available, before our overseas neighbors take full advantage of our misfortune, and send all those billions in profit home.
America is the greatest country in the world, and if we don’t have the courage to invest in it ourselves, then it will slowly be sold out from under us. Invest in America, and the American dream will stay alive.
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.