https://yellowhammernews.com/
By Alabama Realtors,
September 22, 2022,
Current events have drawn attention to foreign investors in U.S. real estate. An increasing number of international buyers are investing in homes and agricultural property across America.
In a recent report, the National Association of Realtors says annual foreign investment in U.S. existing home sales increased by 8.5 percent following three years of declines. The number of homes sold during the period surveyed (April 2021- March 2022) actually declined but demand for homes fueled higher prices resulting in an overall gain.
NAR’s 2022 Profile of International Transactions in U.S. Residential Real Estate found that international buyers purchased $59 billion worth of residential properties at an average price of $598,200 and median price of $366,100. International buyers are defined for the report as non-U.S. citizens with permanent residences outside the U.S. and non-U.S. citizens who are recent immigrants or non-immigrant visa holders who reside for more than six months in the U.S. for professional, educational, or other reasons. Those buyers purchased 98,600 homes in the one-year period.
Canadian and Chinese citizens topped the list in terms of dollars spent. Residents of India, Mexico, and Brazil completed the top five. Chinese buyers purchased $6.1 billion of existing homes and because of favorable currency rates, they had more spending power.
International buyers most often chose Florida, followed by California, Texas, Arizona, and New York and North Carolina which tied for fifth place. Florida was the favored location for buyers from Canada, Brazil, and Colombia. California attracted the most buyers from China and India.
1.7 Million Acres
Alabama has its share of foreign real estate investment, but almost all is in agricultural land rather than homes and condos. The Netherlands and Canada top the list of Alabama’s foreign land owners. Italy, the United Kingdom, and Germany round out the top five.
In Alabama, almost all foreign-owned agricultural property is in forests with Butler County having the most at almost 150,000 acres. Dallas County had the most foreign investment in acreage for crops at 2,189. According to a 2019 U.S. Department of Agriculture report, foreign investors own more than 1.7 million acres of Alabama agricultural land, which is the third-highest amount among U.S. states and represents 2.7 percent of all privately held agricultural land in the United States.
$1.1 Billion for Businesses
Aside from residential and agricultural property, Alabama has sizeable and growing investments in businesses owned by foreign companies. Alabama attracted 44 foreign direct investment projects in 2021 valued at $1.1 billion, according to the Alabama Department of Commerce. Projected to create 1,700 direct jobs, the businesses contribute to home sales by employing local workers.
“Foreign direct investment (FDI) has been a vital ingredient in Alabama’s economic growth in recent years,” says Commerce. Rural communities – often left behind in community growth –attracted almost $1.5 billion in foreign investment projects with over 3,800 job commitments in 40 targeted rural counties. Most FDIs primarily came from South Korea, Canada, Japan and Germany. Companies from Finland, Brazil and Ireland also chose to invest in Alabama. Especially when those companies bring well-paying jobs, the real estate market benefits as more workers qualify for mortgages to purchase both starter homes and beyond. A recent example is rural Bibb County where from 2001 to 2019 average annual pay increased from $21,676 to $44,590. A major catalyst for higher pay was area leaders’ commitment to develop an industrial park that is now the site of major foreign corporations that plan to spend $614 million and create nearly 1,300 jobs at the site.
“Alabama has benefited from foreign investment whether in land or in businesses,” said Alabama Association of Realtors CEO Jeremy Walker “That’s critical in rural areas of our state that need an economic boost. One investment in a rural area from an auto parts manufacturer or aerospace supplier can be a powerful economic engine that transforms the employment and income levels of area residents. Better jobs and higher wages are always good news for home sales and construction.”