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Overseas Property Buyers Paying Cash Take Advantage of Dwindling U.S. Market - 1 October 2010

Foreign investors spent $41 billion in U.S. property from March of last year to this year, according to the National Association of Realtors.

More than half of the homes bought were in Arizona, California, Texas and Florida and were paid for in cash — quite the contrast from the 92 percent of domestic homebuyers who took out a mortgage.

Home prices in the U.S. have continued to drop drastically since the federal homebuyer tax credit expired this spring, which let first-time homebuyers claim a $8,000 credit on their taxes, and repeat homebuyers claim a $6,500 credit. To give investors — at home and abroad — another incentive to buy, sellers across the country have been forced to further slash prices.

Last month, 72 percent of home sales in Florida were for bank-owned properties or short sales — a house that sells for less than the mortgage owed on it. Realtors in the Sunshine State are saying they’re now focusing their efforts on foreign investors since domestic sales have fallen after the tax credit ended.

Last year, overseas investors made up about 4 percent of the overall $907 billion market in the U.S. Canadians purchased the greatest number of homes in the U.S. (23 percent), followed by Mexicans (10 percent), British (9 percent), Chinese (8 percent) and Germans and French combined (7 percent).

Realtors say that overseas interest has increased so far this year, and with many foreigners paying cash, it only helps expedite the buying process.

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