With Dollar and U.S. House Prives Both Down, Europeans Are Bargain Shopping

LONDON — Thanks to a weak dollar, Americans have grown used to seeing Europeans on shopping sprees in the States, grabbing up cheap Levis, cheap iPods, and enough cheap luggage to carry it all home in.

But now Europeans are buying something else as well — houses.

"European buyers are taking advantage of the correction in the real estate market, a lot of inventory to choose from, and also the good interest rates they can still find," said Mark Semeraro, a Realtor in Naples, Fla. "They see this as a half-price sale for them."

"I'd say that most big American developments are now marketing themselves to Europeans," he said.

Semeraro said that his company, John R. Wood Realtors, has seven offices scattered across Florida and that all are seeing a big increase in European interest.

"We have had an overwhelming number of Europeans within the last six months asking about the Atlanta market," said Heather Stanton, an agent at Starate Real Estate Associates in Stockbridge, Ga.

"With the mortgage industry in the Untied States becoming so stringent with loaning money, the rental market is really increasing, and thus allowing investors from other countries to buy cheap and lease quickly," she said.

The sheer speed of the dollar's decline against major foreign currencies has been instrumental in sparking recent interest.

The British pound has jumped 34 percent against the dollar compared with five years ago, including 10 percent in the past 12 months. The euro has made even bigger strides, rising 47 percent since 2002.

As a result, European investors have more purchasing power in the U.S. market and so are increasingly on the lookout for dream property deals on the other side of the pond.

Adding to the appeal is the fact that the U.S. housing market has been hit hard by the credit crisis, which has made properties even more attractive for Europeans stunned by sky-high house prices in their home countries.

In a mid-2007 survey, the National Association of Realtors found that Florida led the nation in foreign home buying, accounting for 26 percent of all international purchasers. California was next at 16 percent, followed by Texas at 10 percent.

Particularly popular over all are hotel condominiums in warm-weather destinations.

The survey found that 34 percent of realtors in Florida have worked with an international client in the past year.

Some 34 percent of the foreign home buyers in Florida were from Latin America. Another 21 percent were from Britain. About 9 percent came from Canada and another 8 percent from Germany. The rest were from Asia, Eastern Europe, and other areas of the world.

According to the Florida Association of Realtors, the Miami-Fort Lauderdale area remains the top destination, attracting 27 percent of foreign home buyers. Another 14 percent buy in the Orlando area, with another 12 percent purchasing homes in the Tampa-St. Petersburg area.

John Krol, a realtor with Realty World Top Producers in Naples, Fla., said he's seen strong interest in properties in his area from British buyers in particular.

"Britons who were once just interested in Orlando are now interested in Naples because they like the beaches here," he said. "We see some people buying second homes they don't rent out and some buying homes they do rent out."

In Florida, some 39 percent of foreign buyers purchased homes for vacation property. About 37 percent were swayed by both vacation and investment motives. Still another one-fourth purchased property for investment and rental purposes.

Most appealing, according to Krol, is that buyers can get a nice home for less than $300,000.

He said he recently sold a three-bedroom, 1,700-square-foot townhouse with a huge porch for just over $220,000.

"These buyers have a lot of negotiating power and they know they might not have it next year at this time," he said.

One buyer who understands his leverage is Steven Toumbas, an equities investor from London, who has just purchased a $1.2 million apartment in the luxury Trump Soho development in Manhattan.

"I'm buying property at bargain prices in New York City, which I think is the most stable market in the states," he said.

Even so, there are still plenty of Europeans who are maintaining a wait-and-see attitude when it comes to the U.S. housing market.

One reason is that it's still not clear whether the market has bottomed out.

"I think there are lots of Europeans who are holding off and waiting for prices to go down even further," said Steve Barker, another realtor in Naples, Fla. "I'm getting a lot of calls from places like the U.K., but they're not yet rushing over here to buy.

"Many people are trying to figure out when the prices will bottom out," he said. "There is a huge pent-up demand as everyone waits to see what happens."

Jennifer Giraldi, an agent at Solid Source Realty in Roswell, Ga., also warned that mortgages for foreign nationals are also hard to come by, "so unless foreigners have cash, it can be tough for them to get a home."