Foreign Buyers are Snapping up U.S. Homes

“Reporting from Washington— Because of the housing market meltdown, foreign governments and banks are shying away from bonds backed by American home loans. But individual foreign buyers are taking advantage of the crash to snap up U.S. bargains at a record clip.

When housing was flying high, foreign entities were buying the lion’s share of the mortgage-backed securities packaged by Fannie Mae and Freddie Mac, the two quasi-government agencies that help keep the housing finance system flush with cash by buying mortgages from Main Street lenders.

Now, with Fannie Mae and Freddie Mac in conservatorship and their futures in question — and with millions of homeowners underwater on loans held by Fannie Mae and Freddie Mac — the foreign share of the mortgage-backed securities market is just a fraction of what it once was. Instead, foreigners are gobbling up individual properties.

Foreign clients bought $41 billion worth of stateside houses and apartments during the 12-month period that ended in March 2011, according to the latest tally by the National Assn. of Realtors. That’s roughly the same as the previous year.

But add in the $41 billion spent by immigrants who moved here within the last two years and individuals with visas of more than six months, and the total is $82 billion worth of U.S. residential real estate taken off the market by international buyers, up from $66 billion the year before.

The demand for American real estate is so strong that last fall, the Realtors association launched an international version of its listing website. Now, the 4.4 million properties displayed on Realtor.com can be viewed more easily by buyers from practically any place in the world, and in almost a dozen languages.

In the 1980s, when investors from Japan and other countries were buying large amounts of commercial real estate, including such iconic properties as the Pebble Beach golf club and Rockefeller Center in New York, there was fear in some quarters that the U.S. was for sale to foreigners.

There’s no such outcry this time around, if only because the foreign share of the domestic housing market is but a small sliver of a $1.07-trillion pie. And in markets where foreign buyers are most active, their pesos, pounds and rupees are being welcomed with open arms because they are helping unclog the logjam of unsold and foreclosed houses, a jam-up many believe must be cleared before residential real estate can regain its equilibrium.” [Read more]