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Research on Real Estate Purchasing Habits by Internationals & US citizens in the Southwest Florida Region

OBJECTIVES:
FY 2011 - 2012 (Quarterly numbers over 8 quarters) What is the number and percentage of Canadian buyers of real estate What is the number and percentage of European buyers of real estate What is the number and percentage of South American buyers of real estate What is the number and percentage of US buyers of real estate What is the number and percentage of CASH transactions For cash transactions, is the money coming from retirement, savings, or mortgaged from something else. (ie did the Canadian mortgage their home in Canada and move the cash to Florida) What is the number and percentage of Mortgage transactions What does the economy of each buyers resident country look like (ie - is it stable, growing, declining, etc Would also like charts and graphs, or at least spreadsheets of each so they can be created.

By: Paul Forsberg
May 2013 © 2013 Copyright Paul Forsberg. No portion of this may be re-printed without express permission. For permission please contact Paul Forsberg at paul@FLACRE.com or call 941-268-8038

2 Florida International buyers:     19% of all sales in 2012 were to non-resident internationals. 25% of all sales in 2011 were to non-resident internationals. 82% of all sales in 2012 by internationals were done by cash savings. 86% of all sales in 2012 by internationals were done by cash savings.

Canadian buyers: After checking a number of sources it can be stated that the large majority of Canadian buyers use savings as a form of payment. For Florida, particularly Southwest Florida at least 80% of Canadians used savings to purchase property. In most cases the figures are above 90%. There are however some options for Canadian buyers who do not have enough cash. The Southwest region is so popular with Canadians that there is a branch of the Royal Bank of Canada. Not only that, but there are direct flights available to Canada from the local airport. 2012: Region Bradenton – Sarasota - Venice Cape Coral - Fort Myers % of purchases in Florida 14.4 9.9

2011: Region Bradenton – Sarasota - Venice Cape Coral - Fort Myers % of purchases in Florida 9 10

South American buyers: Although similar to the rest of the international buyers, South American buyers were more likely to finance their purchases through a mortgage. Most statistics showed that around 15-20% of South American buyers got a mortgage inside the US. Less than 2% of buyers were able to get a mortgage inside their home country. However, the Southwest region of Florida was not the #1 option for most South Americans, and the large majority of them had bought property on the Eastern part of Florida. The reason why Brazilian buyers were interested in buying property was due to an increase in prices in the metropolitan areas in Brazil. Real estate prices doubled in the large cities in Brazil, while the prices of real estate in Florida were half of what they used to be before the crisis.

© 2013 Copyright Paul Forsberg. No portion of this may be re-printed without express permission. For permission please contact Paul Forsberg at paul@FLACRE.com or call 941-268-8038

3 Latin American buyers (Exclude Brazil & Venezuela): 2012: Region Bradenton – Sarasota - Venice Cape Coral - Fort Myers % of purchases in Florida 0.9 1.8

2011: Region Bradenton – Sarasota - Venice Cape Coral - Fort Myers % of purchases in Florida <1 <1

Brazilian buyers: 2012: Region Bradenton – Sarasota - Venice Cape Coral - Fort Myers % of purchases in Florida 1.7 <1

2011: Region Bradenton – Sarasota - Venice Cape Coral - Fort Myers % of purchases in Florida <1 <1

Venezuelan buyers: 2012: Region Bradenton – Sarasota - Venice Cape Coral - Fort Myers % of purchases in Florida <1 <1

2011: Region Bradenton – Sarasota - Venice Cape Coral - Fort Myers % of purchases in Florida <1 <1

© 2013 Copyright Paul Forsberg. No portion of this may be re-printed without express permission. For permission please contact Paul Forsberg at paul@FLACRE.com or call 941-268-8038

4 UK buyers: There is a small difference between UK buyers and the rest of western European buyers, and that is the financing. Almost 10% of UK citizens were able to obtain a mortgage inside their own country and use that to buy property in Florida. However, 15 % of UK buyers were also able to get financing in the US due to the recovery of the banking sector. With attractive loan rates the British are more likely to refinance their mortgage in the US. Around 50% of UK citizens had bought property in the area between Tampa and Naples. 2012: Region Bradenton – Sarasota - Venice Cape Coral - Fort Myers % of purchases in Florida 25.8 6.5

2011: Region Bradenton – Sarasota - Venice Cape Coral - Fort Myers % of purchases in Florida 10 10

Western European Buyers: Just like the Canadian buyers, a large majority (over 80%) of buyers from Western Europe used cash as a form of payment. Only 2% of buyers were able to remortgage their property in Europe in order to buy a new property in Florida. Similarly to the UK buyers, the rest of the Europeans were buying property in Southwest Florida. However there are smaller countries that are starting to show interest in the Southwest region of Florida. There buyers are arriving from Switzerland and the Netherlands, both countries having very high living standards. Western European buyers (Exclude UK): 2012: Region Bradenton – Sarasota - Venice Cape Coral - Fort Myers % of purchases in Florida 11.9 9.2

2011: Region Bradenton – Sarasota - Venice Cape Coral - Fort Myers % of purchases in Florida 7 14

© 2013 Copyright Paul Forsberg. No portion of this may be re-printed without express permission. For permission please contact Paul Forsberg at paul@FLACRE.com or call 941-268-8038

5 % of Southwest Florida sales to internationals in relation to the entire state of Florida:

30 25 20 15 10 5 0 Canada UK West EU South Am.

Cape C. Ft My. 2012 Brad. Sa. Ve. 2012 Cape C. Ft My. 2011 Brad. Sa. Ve. 2011

Notes: The clearest change is the increase in sales of property in the Cape Coral and Fort Myers region, and a small decline of sales in the Bradenton-Sarasota-Venice region. % of sales to international buyers in Florida 2011 39% 7% 1% 4% 5% 8% 3% 3% 0% 7% 77% 2012 31% 5% 3% 4% 4% 9% 4% 4% 2% 7% 70%

Canada UK Italy France Germany Brazil Argentina Colombia Peru Venezuela Total % of int. purchases

© 2013 Copyright Paul Forsberg. No portion of this may be re-printed without express permission. For permission please contact Paul Forsberg at paul@FLACRE.com or call 941-268-8038

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% of sales to international buyers in Florida (simplified by Region) 2011 39% 17% 21% 2012 31% 16% 26%

Canada Europe South America

Financing:

South Amer. Venezuela West EU UK Brazil Canada 0% 20% 40% 60% 80% 100% Cash US mortgage Home Mortgage

Statistics on US buyers for Florida: Closed Sales 52,624 52,022 55,312 44,456 43,418 47,852 52,483 44,598 % of Cash sales 46.7 43.2 45.1 48.2 44.3 42.6 45.1 50.2 Cash sales 24,580 22,477 24,919 21,423 19,239 20,390 23,695 22,393

2012 Quarter 4 2012 Quarter 3 2012 Quarter 2 2012 Quarter 1 2011 Quarter 4 2011 Quarter 3 2011 Quarter 2 2011 Quarter 1

© 2013 Copyright Paul Forsberg. No portion of this may be re-printed without express permission. For permission please contact Paul Forsberg at paul@FLACRE.com or call 941-268-8038

7 Economic overlook for countries involved:

CANADA USA UK GERMANY FRANCE ITALY COLOMBIA ARGENTINA VENEZUELA PERU BRAZIL

GDP GROWTH % 1.1 1.7 0.6 0.1 -0.3 -2.8 3.1 2.1 5.5 5.9 1.4

UNEMPLOYMENT % 7.2 7.6 7.9 5.4 10.6 11.6 11.8 6.9 7.6 6.4 5.7

ECON. FREEDOM RANK #6 #9 #16 #23 #64 #87 #45 #138 #175 #41 #113

Canada: The most recent expectations are that the Canadian economy will not grow as expected in 2013. There are still rough times ahead to fully recover from the recession, but Canada is working to strengthen its economic ties with the US and European countries outside the EU zone. As research shows Canada has one of the highest rankings in economic freedom which means it is one of the most stable countries in the world. EU: The European Union consists of many countries with very different economic situations. There are constant changes in policy, such as new tax laws in France that might drive away their high income earners. There are also a lot of people who are leaving their home countries, such as Spain and Greece in order to look for opportunities elsewhere. Another important fact is that the EU – US dollar is exchange rate is still favorable for Europeans, staying at 1.30. South America: For the past couple of years the economic growth in most South American Countries has been stable. But, as the rankings show the economic freedom is very low. The data recovered from those countries is also very unreliable, so it is always difficult to have a clear picture of how their buyers behave. Some countries have rather stable political systems and democratic elections. However in countries like Venezuela there has been political turmoil and this has led to a lot of its citizens trying to purchase property in the US, specifically Florida. United States: The US economy is getting closer to 7% unemployment, which means it is nearing its natural unemployment rate of 5%. This also means that US residents are more likely to obtain means of finance for a new home. There is no longer a decline in the prices of homes in Florida. These factors will have a positive influence on the average US buyers in regards to long term investments. It is most likely that a home purchase in 2013 will start to bring in profit, unlike the past 4 years where it was losing value.

© 2013 Copyright Paul Forsberg. No portion of this may be re-printed without express permission. For permission please contact Paul Forsberg at paul@FLACRE.com or call 941-268-8038

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US Citizen Purchases 2012

Cash 49% Mortage 51%

Analysis: The reason why there is such a high percentage of cash purchases (49%) is due to condo and townhouse sales. 75% of condo and townhouse purchases were completed with cash sales, after the banking crisis it was very difficult to obtain a mortgage on condos. Not only that, but most of those sales were from foreclosures.

US Citizen Purchases 2011

Cash 46% Mortgage 54%

© 2013 Copyright Paul Forsberg. No portion of this may be re-printed without express permission. For permission please contact Paul Forsberg at paul@FLACRE.com or call 941-268-8038

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Sources:

www.floridarealtors.org http://www.floridarealtors.org/Research/upload/Profile-of-International-Home-Buyers-in-Florida-2012August-24-2012.pdf http://www.economywatch.com/economic-statistics/economicindicators/Economic_Freedom_World_Rank/ http://www.imf.org/external/pubs/ft/weo/2013/01/index.htm http://www.tradingeconomics.com/country-list/unemployment-rate http://www.colliers.com/enus/southwestflorida/~/media/files/marketresearch/unitedstates/markets/tampabay/q42012_foreign_capital_trends_report.ashx http://www.huffingtonpost.ca/2013/04/17/bank-of-canada-economy-interestrates_n_3100329.html#slide=2345979 http://www.cpswfl.com/market-pulse/

© 2013 Copyright Paul Forsberg. No portion of this may be re-printed without express permission. For permission please contact Paul Forsberg at paul@FLACRE.com or call 941-268-8038

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