INSIDE REAL ESTATE: Foreign homebuyers have cash to spend in Alaska
As can be expected, top destinations for foreign homebuyers are the sunshine states of Florida, California, Texas and Arizona.
However, in a little heralded survey in 2015, published by the National Association of Realtors, Alaska ranked number No. 6 as a destination for foreign homebuyers. More recent surveys have dropped Anchorage and Alaska out of the top 20 but the survey reminded me of my first encounter with a foreign homebuyer back in 1984.
That was when Alaska was just beginning to establish relationships with the Russian Far East. As a listing agent, the foreign buyers I met had obtained a loan from a local bank to purchase a home in a southeast Anchorage subdivision.
After closing they wanted to put up a satellite dish on the front of the home but the covenants, codes and restrictions for the subdivision required it to be attached to the rear of the home.
Their first response was “Well, we’ll just give the keys back to the bank if we can’t put it where we want to.”
That seems like an amusing anecdote now but in 1984 Russians were not allowed to own property in their native country. The closest they could come to property ownership was a leased plot for their “deshka,” the equivalent of a summer cabin here in Alaska.
Today, it is not unusual for realtors to do business with foreign homebuyers. Although there is no specific state survey, Alaska is an attractive second home destination for foreigners, particularly in recreational communities like Homer and Sitka.
An international buyer refers to two types of non-U.S. citizens. Type A is a non-U.S. citizen who primarily resides outside the U.S. and who doesn’t stay in the U.S. year-round. The Type B buyer is a non-U.S. citizen who is temporarily residing in the U.S on non-immigrant visa, such as diplomats, foreign students, and foreign workers or recent immigrants who have been in the U.S. for less than two years as of the time of their purchase.
According to the National Association of Realtors, foreign buyers purchased $102.6 billion in residential real estate in 2016, down slightly from a high of $103.9 billion in 2015. Nationally, about 34 percent of foreign buyers come from Asia. Latin American and the Caribbean buyers make up about 21 percent and Europeans 18 percent.
China has been the top country of origin for foreign buyers since 2015 as far as number of transactions. China includes the People’s Republic of China, Hong Kong and Taiwan for these statistics.
Buyers from Alaska’s neighbor, Canada, are also considered foreign buyers, and according to the NAR survey, make up 12 percent of all foreign buyers in 2016. What is also interesting is that, on average, foreigners purchase more expensive homes, with an average sales price of $477,500 in 2016, compared to U.S. citizens’ average purchase price for existing homes at $266.700.
As Alaska’s diverse ethnic population continues to grow, we can expect more and more foreign citizens to purchase homes in our communities which will be a stabilizing factor in the residential market as Alaska works its way through its fiscal dilemma.