I found this article written by HEATHER ELIAS who is the Director of Social Business Practice at National Association of Realtors. As I more than occasionally get questions about the ObamaCare 3.8% Tax on the “sale of Palos Verdes homes and South Bay homes”, I thought I would just distribute her article word for word with all the hyperlinks active. This way, you can get the straight unfiltered information. Hope this helps clear up questions. Personally, I believe this to be an onerous tax, but you can, of course, decide for yourself.
Last week, I wrote a post here about the 3.8% tax that is part of the Health Care Reform Act, which passed in 2010. There have been numerous emails circulating that mischaracterized how the tax worked, and here at NAR we wanted to help people understand it better. The post created a flurry of comments, and I thought we would address some of the points raised directly. (I’m taking some of my clarification points directly from The Top 10 Things You Need to Know about the 3.8% Tax.)
Here is a video with NAR’s director of tax policy, Linda Goold, that does a very good job of explaining:
And here are some more resources that could help explain:
Do International Buyers effect the Palos Verdes Homes Market?
Due to low prices and the relative weakness of the dollar, international buyers continue to identify the U.S. as a desirable place to own property and make a profitable investment.
According to the National Association of REALTORS®’ 2012 Profile of International Home Buying Activity, total residential international sales in the U.S. for the past year ending March 2012 equaled $82.4 billion, up from $66.4 billion in 2011. Total international sales were evenly split between non-resident foreigners and recent immigrants. The survey asked REALTORS® to report their international business activity within the U.S. for the 12 months ending March 2012.
“Today’s advantageous market conditions have drawn more and more foreign buyers to the U.S. in recent years, signaling how desirable and profitable owning property in this country can be,” said NAR President Moe Veissi, broker-owner of Veissi & Associates, Inc. in Miami, Fla. “Low housing prices, a good inventory condition and increased buying power with today’s exchange rates help attract international clients. Foreign buyers also have the advantage of working with a REALTOR®. REALTORS® who specialize in serving international clientele have a truly global perspective; they know what hurdles foreign buyers face when purchasing property in the U.S., and have the expertise and knowledge that comes from working with clients from different cultures and real estate practices.”
International buyers bought homes throughout the country, but four states accounted for 51 percent of the purchases – Florida, California, Texas and Arizona. Florida has been the fastest growing destination of choice, accounting for 26 percent of foreign purchases. California was second with 11 percent and Texas and Arizona accounted for seven percent. Proximity to the home country, the presence of relatives and friends, the convenience of air transportation, and climate and location are all important considerations to prospective foreign buyers. Locations on the East Coast generally attract European buyers, while Asian buyers tend to purchase on the West Coast, particularly California. Florida attracts a diverse set of international buyers including South Americans, Europeans and Canadians. Meanwhile, Texas remains popular among Mexican buyers. Within markets in an individual state, it is not unusual to find concentrations of people grouped by nationality.
“Foreign buyers recognize that owning a home in the U.S. has many benefits, both financial and social,” said Veissi. “Many purchase property as an investment, vacation home, or to diversify their portfolio. In addition, many recent immigrants view homeownership as an important accomplishment. They believe that being a homeowner is one of many ways they become established in the U.S. and attain stability, security, and a sense of community.”
International buyers came from all over the globe, but Canada, China (The People’s Republic of China including Hong Kong), Mexico, India, and the United Kingdom accounted for 55 percent of all international transactions (continue below to see local Palos Verdes Homes results), according to the survey. Canada and China remain the fastest-growing home countries. Canada accounted for 24 percent of international sales while China accounted for 11 percent, up from nine percent in 2011. Mexico was third with eight percent of sales and India and the U.K. both accounted for six percent.
Forty-five percent of international purchases were under $250,000. In addition, there appears to be a gradual increasing trend toward purchases in the $250,000 to $500,000 price range. In 2012 this range accounted for 30 percent of purchases, up from 28 percent in 2011. The average price paid by an international buyer was $400,000 compared to the overall U.S. average of $212,000. Several reasons account for why the average international home price is higher than the average overall price. The international client is typically wealthier than the domestic buyer and is looking for a property in a specialized niche, for example, a larger property suitable for multi-generational living, or a property that establishes the individual’s presence and standing in the community.
Many homes purchased by foreign buyers are used as a primary residence. Vacation and rental use are also major reasons for a purchase. More than half – 66 percent – of survey respondents reported international buyers purchased detached single-family homes. About half of international buyers, 52 percent, preferred to buy in a suburban area and about a quarter, 23 percent, bought in a central city/urban area.
Sixty-two percent of international purchases were all cash, which has increased since 2007. International buyers still experience many financing challenges when purchasing a home in the U.S. In fact, among transactions that failed, REALTORS® reported that in 26 percent of the cases financing issues were the problem. The difficulties facing foreign buyers in trying to obtain a mortgage include lack of U.S.-based credit history and hurdles in meeting mortgage requirements. Other reasons for not purchasing properties were cost/taxes/insurance and immigration laws.
Twenty-seven percent of REALTORS® reported having worked with international clients this year. Fifty-two percent of REALTORS® reported that international transactions accounted for one to 10 percent of their total transactions, while 27 percent reported that they made up more than 10 percent of total transactions. REALTORS® specialization on the buyer’s side of the market – such as foreign language capabilities, cultural affinity or orientation with the prospective purchaser and experience in explaining the U.S. real estate – appear to be important in working with foreign buyers.
So when it comes to Palos Verdes real estate, is there a way to track international buyers? In fact there is*; reviewing the websites where I’ve recently promoted and sold one of my clients homes, I discovered the following …
*If your Realtor does not know how to do this, you’re missing a big part of successfully getting your home marketed to sale. You’re welcome to contact me for more information
I’m finding that most popular are the Palos Verdes Homes with Ocean Views … like this one…
However, no matter what type of home you have, contact me to get (1) an objective opinion on what the market is likely to pay for your home AND (2) get more ideas on how to best get your home marketed (such as marketing to the international buyers) for top dollar in an efficient time period. Even folks that already have an agent, find it good common business sense to meet with me so that they can capture those two benefits. I’m here to help.
Palos Verdes Luxury Homes
Simply go to this Palos Verdes luxury home search website or click the image below and you will have a REAL TIME tool that will show you the homes for sale in the over $1,500,000 price range located in Palos Verdes. The tool is simple to use and you can bookmark the link to come back to any time you want.
All you have to do is scroll your mouse over the house icons on the map and click the house icon to get pictures and details on that home.