2013 Survey of International Home Purchases

Miami-Dade-Broward, Florida Conducted by NAR Research for MIAMI Association of REALTORS®

Summary of Responses

Lawrence Yun, Senior Vice President Jed Smith, Managing Director, Quantitative Research

Gay Cororaton, Economist Data Gathered September/October 2013

Outline of Presentation

• About the Survey and Major Conclusions

• Survey Results

– Experience with International Transactions

– Buyer Characteristics

– Miami-Dade-Broward REALTOR® Designations

– Major Issues Reported by Miami-Dade-Broward REALTORS®

• Summary of Key Findings

About the Survey

• Survey Conducted During Sept 23 –Oct 11, 2013.

• Questions Focused on Miami-Dade-Broward REALTOR® Experience During Past Twelve Months.

• Invitation was sent out by Miami Association of REALTORS® to its members

• Received a Total of 1044 responses.

Miami-Dade 83%

Broward 16%

Others 1%

Area of membership of REALTOR® Respondents in Past 12 Months--2013 Miami-Dade-Broward, FL

Survey

Major Conclusions

• International sales are an important niche market for a number of Miami-Dade-Broward REALTORS.®

• Survey data concerning transactions for the 12 months ended Sept-Oct 2013 indicates a slight increase in the volume of international transactions and purchases and an increase in the purchase price.

• Majority of international clients are foreign residents (Type A). Resident foreigners (Type B transactions) are also important.

• There are discernible differences between Miami-Dade’s and Broward’s international clients regarding the volume of international transactions, mode of contact , purchase price , type and area of property purchased, top tier countries of client origin, and reason for buying

• Data indicates an increase in members who have less than 5 years of experience.

• Many respondents hold designations (e.g., CIPS, CRS, GRI, BPO) and have 6 or more years of experience.

• The international market remains important though challenging for many, requiring that REALTORS® deal with financing, language and cultural issues.

Miami-Dade-Broward REALTOR® Experience with International Transactions

Most Miami-Dade-Broward REALTORS® Have Worked with an International Client in the Past 12 Months

75%

83% 77% 77%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013

Percent of Miami-Dade-Broward REALTOR® Respondents Who Worked With an International Client in Past 12 Months

The 2010-2012 surveys covered South Florida.

A Larger Percentage of Miami-Dade REALTORS® Have Worked with an International Client in the Past 12 Months

78%

71%

66%

68%

70%

72%

74%

76%

78%

80%

Miami-Dade Broward

Percent of Miami-Dade-Broward REALTOR®Respondents Who Worked With an International Client in Past 12 Months

Most International Clients are Non-Resident Foreigners * But Share is Lower Compared to Past Years

• Type A clients are non-resident foreigners. They reside in another country and do not plan to live permanently in the United States.

• Type B clients are recent immigrants/resident foreigners/temporary visa holders looking for primary residence in the United States.

52%

8%

39%

60%

8%

31%

44%

10%

46%

0%

10%

20%

30%

40%

50%

60%

70%

Type A Type B Both

Per

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ents

Type of International Client Purchasing in Miami-Dade-Broward, FL

2010 2011 2013

50% of Miami-Dade-Broward REALTORS® Closed Six or More

Transactions in 12 months ending Sept-Oct 2013

0 1 to 5 6 to 10 11 to 15 16 to 20More than

20

2011 14% 42% 22% 8% 5% 9%

2012 14% 46% 18% 10% 6% 7%

2013 10% 40% 21% 12% 6% 11%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Pe

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nt

of

Re

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Total Number of Transactions, Domestic and International, Closed in Past 12 Months

2012: 41% closed 6+ transactions 2013: 50% closed 6+ transactions

Personal Contacts, On-line Presence, and Previous Clients Are Important in Obtaining Foreign Clients

41%

26%

6%

1%

15%

1%

4%

7%

44%

25%

5%

2%

14%

2%

3%

5%

Personal Contacts

Previous Clients

Business Contact Ouside Country

Business Contact in U.S.

Online Marketing

Newspaper/yard sign

Walk-in, open house, random call

Other

How REALTORS® Get International Clients

2012 2013

Largest Source of Clients Miami-Dade: Personal Contacts

Broward: Previous Clients

47%

23%

6%

2%

14%

1%

2%

5%

32%

40%

1%

1%

13%

4%

5%

4%

Personal contacts

Previous clients

Business contact outside of the country

Business contact in the U.S.

Online marketing

Newspaper/yard sign

Walk-in, open house, random call

Other

How REALTORS® Get International Clients

Miami-Dade Broward

38% of Miami-Dade-Broward REALTORS® Had Six or More International Clients in 2013

1 2 3 4 5 6 7 8 9

2011 13% 15% 17% 9% 12% 20% 5% 3% 6%

2012 18% 17% 15% 10% 12% 18% 4% 3% 5%

2013 9% 14% 15% 11% 12% 22% 7% 3% 6%

0%

5%

10%

15%

20%

25%

Pe

rce

nt

of

Re

spo

nd

en

ts

In Past 12 Months, Number of International Clients, Regardless of Whether They Purchased Property

2012: 30% had at 6+ int’l clients 2013: 38% had at 6+ int’l clients

About One-Third of Miami-Dade-Broward REALTORS® had a Majority of Their Transactions with an International Client.

0% (None) 1% to 5% 6% to 10%11% to

15%16% to

25%26% to

50%51% to

75%76% to100%

2011 21% 21% 8% 6% 8% 11% 13% 13%

2012 24% 22% 8% 4% 8% 13% 10% 11%

2013 8% 21% 11% 5% 10% 10% 15% 20%

0%

5%

10%

15%

20%

25%

Pe

rce

nt

of

Re

spo

nd

en

ts

In Past 12 Months, Percentage of Transactions with an International Client

2012: 21% had 51+% of transactions with int’l clients 2013: 35%

37% of Miami-Dade-Broward REALTORS® Have Some Percentage of Their International Business That is Commercial

0% (None) 1% to 5% 6% to 10%11% to

15%16% to

25%26% to

50%51% to

75%76% to100%

2011 68% 17% 5% 1% 2% 2% 2% 3%

2012 68% 16% 5% 2% 3% 2% 1% 3%

2013 63% 20% 5% 3% 3% 2% 2% 2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Pe

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f R

esp

on

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nts

Percentage of International Business That is Commercial

Miami-Dade Has A Greater Percentage of REALTORS® Who Have Some Percentage of International Business That is Commercial

0%(None)

1% to 5%6% to10%

11% to15%

16% to25%

26% to50%

51% to75%

76% to100%

Miami-Dade 61% 20% 5% 3% 4% 2% 2% 3%

Broward 70% 20% 5% 3% 1% 0% 2% 0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Pe

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of

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Percentage of International Business That is Commercial

42% of Miami-Dade-Broward REALTORS® Were Involved in Both Residential and Commercial Transactions

0% (None) 1% to 5% 6% to 10%11% to

15%16% to

25%26% to

50%51% to

75%76% to100%

2011 63% 19% 4% 3% 2% 4% 2% 3%

2012 61% 21% 6% 3% 2% 3% 2% 2%

2013 58% 21% 6% 3% 3% 4% 3% 3%

0%

10%

20%

30%

40%

50%

60%

70%

Percent of International Buyers Involved in both a Residential and a Commercial Transaction

Buyer Characteristics

International Prospects Do Not Mean International Sales 71% of Miami-Dade-Broward REALTORS® Had International Clients Who Did Not

Purchase a Property

62%

53% 51%

71%

2010 2011 2012 2013

In Past 12 Months, Did You Have International Clients Who Chose Not to Purchase a Property?

“Could Not Find a Property” and “Cost of Property” Were Two Major Reasons for Not Purchasing

23%

14%

2%

11%

7%

10%

8%

15%

11%

28%

22%

2%

9%

5%

6%

6%

14%

9%

Could not find a property to purchase

Cost of property

Loss of home country benefits

Property taxes

Insurance costs

Exposure to U.S. tax laws

Immigration laws which prevent foreigners from living in theU.S continuously year round

Could not obtain financing / Not able to qualify for mortgage

Other, please specify.

Why Clients Chose Not to Purchase

2012 2013

“Could Not Find a Property” Was Reported More in Broward

26%

23%

3%

10%

4%

6%

6%

14%

9%

37%

17%

1%

3%

7%

6%

6%

15%

9%

Could not find a property to purchase

Cost of property

Loss of home country benefits

Property taxes

Insurance costs

Exposure to U.S. tax laws

Immigration laws

Could not obtain financing

Others

Why Clients Chose Not To Purchase

Miami-Dade Broward

81% of Miami-Dade-Broward REALTORS® Had at Least One International Client Who Purchased a Property

0 1 2 3 4 5 6 to 10 11 to 15 16 to 20More

than 20

2011 31% 17% 14% 11% 5% 7% 9% 3% 1% 2%

2012 33% 16% 15% 10% 6% 7% 9% 1% 1% 2%

2013 19% 16% 19% 11% 8% 7% 12% 4% 2% 2%

0%

5%

10%

15%

20%

25%

30%

35%

Pe

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of

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In Past 12 Months, Number of International Clients Who Purchased a Property in the U.S.

2012: 67 percent 2013: 81 percent

Median Purchase Price of a Typical Client Up in 2013

$100,000or less

$100,001to

$150,000

$150,001to

$200,000

$200,001to

$250,000

$250,001to

$300,000

$300,001to

$400,000

$400,001to

$500,000

$500,001to

$750,000

$750,001to

$1,000,000

$1,000,001or more

2011 17% 16% 12% 12% 11% 10% 8% 7% 4% 5%

2012 14% 14% 14% 12% 11% 10% 9% 7% 4% 5%

2013 8% 11% 10% 11% 9% 11% 9% 11% 9% 11%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Per

cen

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f re

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nd

ents

Distribution of Purchase Price of the Properties Purchased by Typical Client

2012 median price range: $ 200-250K 2013 median price range: $300

International Clients Typically Purchased at Higher Price in Miami-Dade Compared to Broward

Miami-Dade Broward

Median Price Range of International Buyers in Miami-Dade-Broward

$ 300,000 - $ 400,000

$ 200,000- $250,000

Condominiums: The Major Choice Detached Single-Family of Increased Interest

Detached single-family

Townhouse/rowhouse

Condo/apt Time-shareCommercial

Property

2011 16% 9% 71% 0% 5%

2012 20% 12% 64% 0% 5%

2013 23% 9% 64% 0% 4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Type of Property Purchased by Typical Client

Condominiums Are The Major Choice, But More so in Miami-Dade

20%

9%

67%

0% 4%

36%

10%

50%

0% 4%

Detached single-family

Townhouse/rowhouse

Condo/apartment Time-share CommercialProperty

Type of Property Purchased by International Client

Miami-Dade Broward

Commercial Purchases Concentrated in Retail and Multi-Family Properties

Office Industrial Retail Hotel Land Multi-family

2011 17% 18% 24% 9% 2% 30%

2012 21% 17% 17% 3% 4% 39%

2013 21% 11% 24% 5% 6% 35%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Type of Commercial Property Purchased by Typical Client

Next to Multi-family-- Miami-Dade: Retail Property

Broward: Office Property

21%

9%

25%

5% 5%

35%

23%

15% 15%

4% 4%

38%

Office Industrial Retail Hotel Land Multi-family

Type of Commercial Property Purchased by International Client

Miami-Dade Broward

70 Percent of Miami-Dade-Broward REALTORS® Report that Fewer than 10 Percent of International Clients Obtain a Mortgage

0 - 9 % 10 - 19% 20 - 29% 30 - 39% 40 - 49% 50 - 59% 60 - 69% 70 - 79% 80 - 89%90 -

100%

2012 72% 6% 4% 4% 2% 5% 1% 2% 1% 3%

2013 70% 7% 5% 4% 3% 4% 1% 2% 1% 4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Pe

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Percent of Transactions With a Mortgage

Most Buyers Purchased Property in a Central City/Urban Area

Central city/urbanarea

Suburban area Small town/rural area Resort area

2011 63% 19% 1% 17%

2012 64% 20% 1% 16%

2013 66% 20% 1% 13%

0%

10%

20%

30%

40%

50%

60%

70%

Predominant Area in Which Typical Buyer Purchased a Property

Most Buyers Purchased Property in a Central City/Urban Area, More so in Miami-Dade

69%

16%

1%

13%

51%

36%

1%

12%

Central city/urban area Suburban area Small town/rural area Resort area

Predominant Area In Which Typical Buyer Purchased Property

Miami-Dade Broward

The Top Tier Countries of Client Origin

15%

13%

12%

8%

9%

4%

4%

3%

14%

11%

11%

8%

8%

5%

4%

4%

0% 2% 4% 6% 8% 10% 12% 14% 16%

Venezuela

Argentina

Brazil

Colombia

Canada

France

Mexico

Italy

Distribution of Responses Regarding Countries of Origin of International Clients Who Purchased Property

2012

2013

The Second Tier Countries of Client Origin

Respondents also reported international purchases from these countries:

Peru Russia

Spain Dominican Republic

United Kingdom Chile

Ecuador Germany

China Costa Rica

Honduras Nicaragua

India Panama

Others, not identified

Miami-Dade and Broward: Top Tier Countries of Client Origin

14% 12% 12%

8% 7% 6% 5% 4% 3% 3% 3% 3%

Miami Dade: Top Countries of Client Origin 14%

11% 10% 9%

7%

5% 4% 4% 3% 3%

Broward: Top Countries of Client Origin

Miami-Dade and Broward: The Second Tier Countries of Client Origin

Respondents also reported international purchases from these countries:

Miami-Dade : Chile , Ecuador, United Kingdom, Germany

Honduras, China , Nicaragua , Costa Rica, India, Others

Broward: Costa Rica, Ecuador, France, Russia, Spain, Germany, Mexico, Australia, Chile, Panama, Japan, Nicaragua, Portugal, Others

REALTOR® Expertise and Comments

57% of Miami-Dade-Broward REALTORS® Have 6+ Years of Experience

Less than 1year

1 to 5 years 6 to 10 years 11 to 15 years 16 to 20 years21 years or

more

2011 10% 22% 32% 13% 7% 15%

2012 11% 23% 30% 16% 7% 13%

2013 21% 23% 25% 13% 8% 11%

0%

5%

10%

15%

20%

25%

30%

35%

Years of Experience as a REALTOR®

2012: 66% had 6+ years of experience 2013: 57% had 6+ years of experience

Miami-Dade Has A Greater Percentage of REALTORS® With Less than 1 Year Experience

22%

23%

25%

11%

8%

11%

16%

24%

25%

19%

5%

11%

Less than 1 year

1 to 5 years

6 to 10 years

11 to 15 years

16 to 20 years

21 years or more

Years of Experience as a REALTOR®

Miami-Dade Broward

Designations Held by Miami-Dade-Broward REALTOR® Respondents in the 2013 Survey

16%

4%

2%

5%

17%

3%

17%

9%

4%

4%

15%

12%

24%

44%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

CIPS

CCIM

SIOR

RSPS

CRS

CRB

GRI

CLHMS

ABR ABRM

SRES

BPO

ePro

TRC

Other, please specify

Percent of REALTOR® Respondents Having Designations

41% of Miami-Dade-Broward REALTORS® Reported an Increase in the Percentage of Clients Who Are International

IncreasedStayed about the

sameDecreased

Not applicable, havebeen in business less

than a year

2011 49% 34% 9% 8%

2012 45% 41% 6% 8%

2013 41% 35% 6% 18%

0%

10%

20%

30%

40%

50%

60%

Changes in the Percentage of Clients Who Are International in Past Year

REALTORS® Reported Exchange Rates as Important in Affecting the Demand for U.S. Property

Not much of an effect Moderate effect Very significant effect

2011 13% 40% 47%

2012 21% 43% 36%

2013 20% 43% 37%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Effect of Exchange Rates on International Clients

Profitability of Investment and Location Noted as Most Important Factors In Purchasing a Miami-Dade-Broward Property

a secureinvestment

(safety reasons)

a profitableinvestment (yields

income)

a desirablelocation (for

vacation, visits,etc.)

Other, pleasespecify.

2011 40% 35% 20% 5%

2012 27% 34% 34% 5%

2013 28% 38% 31% 3%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Most Important Factor Influencing a Purchase by an International Client of a Miami-Dade-Broward, FL Property

Most Important Factor For Purchase Miami-Dade: Profitability of Investment

Broward: Desirable Location

31%

38%

29%

3%

16%

36%

43%

4%

a secure investment(safety reasons)

a profitableinvestment (yields

income)

a desirable location(for vacation, visits,

etc.)

Others

Most Important Factor Influencing A Purchase

Miami-Dade Broward

Major Comments Reported by Miami-Dade-Broward REALTOR® Respondents in the 2013 Survey

• Miami-Dade-Broward is perceived as a highly desirable for location and investment purposes.

• Costs of paying Home Owner Association fees, property taxes, and mortgage insurance are a concern for foreign buyers.

• Access to U.S. financing is difficult; although most buyers pay cash, REALTORS® may need to discuss credit issues with some potential buyers.

• Immigration requirements are a concern to some prospective buyers. • Some potential international investors were reported as not being able to

buy property because of the low inventory of available homes. • Language and diversity of cultures can be issues in completing

transactions. – Diversity of expectations between potential purchasers and U.S. customs. – Language capabilities important.

• Some REALTORS® noted an increased need for substantial expertise, knowledge, and professionalism in dealing with international clients.

Summary

• International Sales are a Significant Market for Miami-Dade-Broward for location

and investment purposes

• Survey data indicates an increase in the volume of international transactions and purchases in the 12 months ending Sept-October 2013:

-an increase in the percentage of REALTOR® respondents having 6+ international clients (38% in 2013 vs. 30% in 2012) -an increase in the percentage of REALTOR® respondents with 51%+ of their transactions as international (35% in 2013 vs. 21% in 2012) -an increase in the percentage of REALTOR® respondents who had at least one international client who purchased property (81% in 2013 vs. 67% in 2012)

• The majority of clients are Type A (foreign residents), but the share declined; only 67 percent of respondents reported Type A clients compared to about 72-76 percent in the 2010 and 2011 surveys.

Summary, Continued

• The price paid by a typical client increased; the median price in 2013 is about $ 300,000 compared to the median price range of $ 200,000- 250,000 in 2012.

• Buyer characteristics

- Venezuela, Argentina, Brazil, Colombia, and Canada accounted for 52 percent of reported international purchases;

- Condominiums were more preferred than single- family homes, accounting for about 64 percent of purchases ;

- Mortgage financed purchases accounted for a minor portion of international sales

• Many contacts are initiated via personal relationships.

– Although personal contact is most favored, online marketing is increasing.

– For REALTORS® with only an occasional sale, some study of foreign cultures and customers can help to bring the transaction to a successful closure.

Summary--Continued

• Most Miami-Dade-Broward REALTOR® Respondents Have International Expertise and Experience – Respondents reported having a variety of designations indicating

specialized expertise. – Approximately 57 % of respondents reported being in business for

more than 5 years compared to 66% in the 12 months ending Sept 2012.

• International sales market presents unique challenges. - Learning another language can be an advantage. - Personal contacts/referrals are necessary to building an international client base. - Familiarity with tax /immigration/financing regulations is important. - Foreign clients are discouraged by additional costs such as HOA and insurance fees, so helping the client understand the rationale for these costs is critical.

End of Presentation. Thank you.