WORKING WITH INTERNATIONAL HOME BUYERS IN CALIFORNIA Presented by Carmen Hirciag Senior Research Analyst

THINK GLOBALLY What is going on in the world economy?

GLOBAL GDP EXPECTED TO IMPROVE

US GDP GROWTH HAS BEEN MODERATE ANNUAL PERCENT CHANGE, CHAIN-TYPE (2005) $ ANNUAL 2014 QUARTERLY SERIES: GDP SOURCE: US Dept. of Commerce, Bureau of Economic Analysis

GLOBAL UNEMPLOYMENT DECLINING

US & CA UNEMPLOYMENT RATES FALLING SLOWLY SERIES: Unemployment Rate SOURCE: US Bureau of Labor Statistics, CA Employment Development Division

US & CA LABOR FORCE PARTICIPATION RATE ALSO FALLING SLOWLY SERIES: Labor Force Participation Rate SOURCE: BLS, Data Buffet

GLOBAL INFLATION STEADY

US INFLATION IS HEALTHY SERIES: Consumer Price Index SOURCE: US Bureau of Labor Statistics

DOLLAR VALUE RISING SOURCE: Federal Reserve Board

FDI NET INFLOWS GROWING Source: The World Bank

FDI IN REAL ESTATE DOWN Source: Bureau of Economic Analysis

INTERNATIONAL HOME BUYERS IN THE U.S.

INTERNATIONAL PURCHASES ACCOUNT FOR 7% OF REAL ESTATE TRANSACTIONS IN U.S. Source: NAR 2014 Profile of International Home Buying Activity

COUNTRY OF ORIGIN OF INTERNATIONAL BUYERS Source: NAR 2014 Profile of International Home Buying Activity

INTERNATIONAL BUYERS PREFER FL Source: NAR 2014 Profile of International Home Buying Activity

CALIFORNIA HOUSING MARKET The Impact of International Home Buyers

SURVEY METHODOLOGY to random sample of CA REALTORS® in October- November respondents closed escrow within 12 months prior to October/November 2014 with an international client (one who is not a citizen or permanent resident of the US)

AGENT’S GENERAL INTERNATIONAL BUSINESS

CLOSED TRANSACTIONS IN THE PAST 12 MONTHS DECLINED Q. How many real estate transactions did you close during the past 12 months? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

SLIGHTLY MORE REALTORS® CLOSED A TRANSACTION WITH AN INTERNATIONAL CLIENT IN 2014 Q: How many of those closed transactions involved an international client (one whose permanent residence is located outside the United States)? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

# OF TRANSACTIONS CLOSED DECLINED Q: How many of those closed transactions involved an international client (one whose permanent residence is located outside the United States)? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

LAST TRANSACTION

MAJORITY ARE BUYERS Q: Which side did you represent? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MAJORITY BOUGHT IN SOUTHERN CALIFORNIA Q: Where was the property in your closed transaction with an international client located? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

TOP COUNTIES FOR INTERNATIONAL BUYERS CountyPercentage of Clients Los Angeles20% San Diego9.3% Riverside9.0% Orange8.7% Alameda7.9% Santa Clara5.4% Sacramento5.1% Contra Costa4.5% San Mateo3.7% San Francisco / San Bernardino2.8% Q: Where was the property in your closed transaction with an international client located? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MOST SALES NOT DISTRESSED Q: What type of purchase did your last international client(s) make? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MEDIAN LISTING PRICE UNCHANGED Q: What was the initial listing price of the property in your last closed transaction with an international clients? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MEDIAN FINAL SALE PRICE: $490,000 Q: What was the final sale price of the property in your last closed transaction with an international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MEDIAN FINAL SALE PRICE DROPPED 1.5% Q: What was the final sale price of the property in your last closed transaction with an international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

SALE PRICE 2% LOWER THAN LIST PRICE Q: What was the final sale price of the property in your last closed transaction with an international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MAJORITY INTEND TO USE THE PROPERTY AS A PRIMARY RESIDENCE OR INVESTMENT Q: What was the intended use of the property in your last closed transaction with an international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MORE BUYERS PURCHASING PROPERTIES BELOW $500K FOR INVESTMENT SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MORE BOUGHT CONDOS/TOWNHOMES Q: What type of property did your last international client purchase/sell? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

NEARLY HALF BOUGHT IN THE SUBURBS Q: Please select the category that best describes the location of the property in your last closed transaction with an international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MEDIAN SQUARE FEET: 1,900 Q: How many square feet did the property have? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MEDIAN SQUARE FEET 5% LOWER IN 2014 Q: How many square feet did the property have? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

WHY BUY NOW? Q: What was your clients’ main reason for buying now? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MAJORITY ONLY CONSIDERED THE U.S. Q: In which cities outside the U.S. did your buyer consider purchasing real estate? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

WHY THE UNITED STATES? Q: Why did your last international buyer choose to purchase in the U.S.? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MORE BUYERS PURCHASING PROPERTIES ABOVE $1M FOR INVESTMENT & BUSINESS SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

FEWER FIRST TIME BUYERS Q: In your last closed transaction with an international client, was that the buyer’s first home purchased in the U.S.? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

96% OF INTERNATIONAL BUYERS OWN OTHER PROPERTIES Q: How many other properties does your last international buyer own? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

AVERAGE NUMBER OF OTHER PROPERTIES OWNED DECLINED Q: How many other properties does your last international buyer own? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MORE CLIENTS HIRED PROFESSIONALS TO HELP FACILITATE TRANSACTION IN 2014 Q: Did your client hire any of the following professionals to help facilitate the transaction? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

FEWER PROPERTIES FOUND OFF THE MLS Q: How did you find the property for your international buyer? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

BUYERS INTEND TO KEEP THE PROPERTY LONGER Q: How many years does your last international buyer intend to keep the property? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MORE PROPERTIES MANAGED BY PROPERTY MANAGERS IN 2014 Q: Who will manage the property in your last closed transaction with an international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

FINANCING

FEWER INTERNATIONAL BUYERS PAID CASH Q: How did your last international buyer pay for the property? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MORE BUYERS PURCHASING PROPERTIES BELOW $500K PAID CASH SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

DOWN PAYMENT DECLINED Q: How much was the down payment for the home purchased (as a percentage of the sale price)? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

DOWN PAYMENT CAME MOSTLY FROM PERSONAL SAVINGS Q: What was the source of the down payment in your last closed transaction with an international buyer? N=87 SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MORE ACQUIRED FIXED RATE LOANS IN 2014 Q: What type of loan did your last international buyer acquire? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MORE ACQUIRED 30-YEAR LOAN TERMS Q: What is the duration of the loan in your last closed transaction with an international buyer? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

OBTAINING FINANCING IS LESS DIFFICULT Q: Please rate how easy or difficult it was for your last international buyer to obtain financing. (1=Very easy, 10=Very difficult) SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MAJORITY DIDN’T HAVE PROBLEMS WITH TRANSACTION Q: What, if any, other problems did your last international buyer encounter with the transaction? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

CLIENT / AGENT RELATIONSHIP

REFERRALS ARE BEST WAY TO FIND INTERNATIONAL BUYERS Q: How did you find your last international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

INTERNATIONAL WEBSITES ARE GOOD WAY TO REACH FOREIGN BUYERS Q: How did you market yourself to international clients? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

IS MOST POPULAR FORM OF COMMUNICATION Q: How did you primarily communicate with your last international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MOST AGENTS & CLIENTS COMMUNICATE IN ENGLISH Q: In which language did you primarily communicate with your last international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MAJORITY AGENTS & CLIENTS COMMUNICATE VIA SMARTPHONE Q: Which technological device did you utilize the most in communicating with your last international client? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

HALF FOUND PROPERTY IN 1 MONTH OR LESS Q: How many weeks did you spend looking for a property with your last international buyer? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

FEWER WEEKS SPENT LOOKING FOR PROPERTY Q: How many weeks did you spend looking for a property with your last international buyer? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MAJORITY VIEWED < 9 PROPERTIES Q: How many different properties did you view with your last international buyer prior to the client making a purchase? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

FEWER PROPERTIES VIEWED IN 2014 Q: How many different properties did you view with your last international buyer prior to the client making a purchase? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

70% MADE MULTIPLE OFFERS Q: How many offers did your last international buyer make on other properties (in addition to the one purchased)? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

FEWER OFFERS MADE IN 2014 Q: How many offers did your last international buyer make on other properties (in addition to the one purchased)? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

WHO ARE INTERNATIONAL BUYERS? Demographics

TYPICAL INTERNATIONAL BUYER 81% Married 81% College Educated 74% Male 47% Asian 43 Years Old $200K Median Income

MANY INTERNATIONAL CLIENTS FROM CHINA Q: Please tell us about your last closed transaction with an international client. What is your client’s country of permanent residence? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

CHINESE REMAINS TOP LANGUAGE AMONG INTERNATIONAL BUYERS Q: What is your last international client’s primary language? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MAJORITY ARE INDIVIDUALS Q: Was your last international client a(n): SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MAJORITY OF INDIVIDUAL BUYERS ARE MALE Q: What is your (last international) clients’ gender? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

INTERNATIONAL BUYERS ARE GETTING YOUNGER Q: What was your (last international) client’s age at the time the transaction closed? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

MOST INTERNATIONAL BUYERS ARE MARRIED Q: What was your (last international) client’s marital status at the time the transaction closed? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

> 8/10 INTERNATIONAL BUYERS ARE COLLEGE EDUCATED Q: What is the highest level of education your (last international) client had completed at the time the transaction closed? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

OCCUPATION OF INTERNATIONAL BUYERS Q: What does your last international client do for a living? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

NEARLY 1/2 INTERNATIONAL BUYERS ARE ASIAN Q: How would you describe your (last international) client’s ethnic background? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

ANNUAL INCOME/REVENUE Q: What is your (last international) client’s annual income/revenue? SERIES: 2014 International Home Buyer Survey SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

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