Drawn by the relative bargains after housing’s free fall of the past few years, many foreign citizens view U.S. residential real estate as a safe place to park their euros, pesos, rupees, loonies, pounds or yuan.

“Housing is much more affordable in the U.S. than it has been, both for Americans and foreigners,” said Jed Kolko, chief economist with real estate site Trulia.com. “In markets where prices fell dramatically during the housing bust, foreigners have been searching for and buying bargains.”

Foreign buyers plowed $82.5 billion into U.S. homes for the 12 months ended in March, up 24 percent from $66.4 billion the year before, according to the National Association of Realtors, which does an annual survey on international buyers.

The sales – which represented 8.9 percent of all home purchases – were evenly split between recent immigrants and nonresident foreigners, the Realtors group said.

In the nine-county Bay Area, about 6 percent of all property searches by prospective buyers come from abroad, according to Trulia.com, which gets 100 million page views on its site every month. San Francisco is by far the most popular search location for foreigners. Since it is a high-cost area with a thriving job market, it seems likely that many searchers are not looking for rental properties for investment purposes but instead are looking to move to the city.

No U.S. credit history

That was the case with Anant Sapatnekar, 40, who was born in India and after 16 years in Canada has joint Indian-Canadian citizenship. Sapatnekar moved to San Francisco for a software engineering job a few months ago and decided to buy a home to establish himself in his new city.

He faced the usual challenges of sticker shock and a competitive market. But his citizenship added some special hurdles.

“It turned out because I didn’t have any U.S. credit history, I didn’t have FICO scores and all that stuff that U.S. banks required” to get a mortgage, he said.

His first accepted offer fell through when he couldn’t get a home loan in time. Eventually he lined up financing from the U.S. division of the Royal Bank of Canada, since it was able to track his Canadian credit history.

In another way, his status as an immigrant helped him.

When Sapatnekar found a Bernal Heights condo that he liked, his agent encouraged him to write a personal letter to the seller.

“I wrote something from my heart about how I just moved here to start a new life, uprooting myself from one country and starting all over again for the second time,” he said. “I said I really liked the house and it would really help me if you sell it to me.”

His agent, Robert Carter of Vanguard Properties in San Francisco, said: “The seller was an overseas immigrant as well, who came from another country with nothing. She started tearing up (when she read the letter). There were other offers for more money, one of which was all cash” – but she picked Sapatnekar.

Nationally, Florida, California, Texas and Arizona are the preferred states for foreign buyers, the Realtors group found, with Florida accounting for 26 percent of international sales and California in second place with 11 percent. Slightly more than half (55 percent) of the buyers came from five countries: Canada, China (including Taiwan and Hong Kong), Mexico, India and the United Kingdom.

Financing a challenge

In the Bay Area, Trulia found that Canada and the United Kingdom were where most foreign searches originated. In San Mateo, people from Hong Kong, China and Taiwan were heavy searchers, while in Santa Clara County, Indian nationals did a lot of searches.

As Sapatnekar discovered, financing can be a huge challenge for foreign buyers, which may limit the pool to those with deep pockets. The Realtors survey found that 62 percent of international buyers simply paid in cash.

But even those with resources at home may face restrictions.

“The biggest challenge I have with (overseas) buyers is getting their money into the United States,” said Mary Beall, an agent with Prudential California Realty in Walnut Creek. “Many countries have limitations on how much money (citizens) can take out.” One buyer from the Philippines spent several years moving money into a U.S. account in order to pay for a home. “When you make an all-cash offer on a house, if your money is not sitting here in a bank account, they won’t take your offer,” she said.

Luxury properties

Some overseas buyers have such deep pockets that it’s not an issue.

Russian venture capitalist Yuri Milner, an early Facebook investor, bought a 25,500-square-foot Los Altos mansion last year for a cool $100 million – the highest price ever paid for a single-family home in the United States. Modeled on an 18th century French chateau, it has indoor and outdoor pools, a ballroom, and a tennis court, the Wall Street Journal said.

“Lower end” luxury properties are bargains these days. Anna Roberts of Coldwell Banker Residential Brokerage represents a Dubai oil executive who paid $1.75 million for a luxury home in the Marin community of Ignacio. “The owner had put over $3 million into it, so it was an excellent value,” she said. Her buyer plans to use it for family vacations.

“There are cultural differences and sensitivities” in working with overseas buyers, she said. “They need lots of additional information.”

Serbian national Milos Citakovic, 26, who moved to San Francisco four months ago as co-founder of a text-messaging company called Poosh.com, said he is seeking a two-bedroom condo here in the $800,000 range – and considers that a bargain, especially after having recently lived in Moscow, where prices are even more outrageous than here.

“The dollar is relatively weak against the euro. A million bucks in the U.S. is more like $800,000 in Europe, so we are basically saving 20 percent on the exchange rate when we come over from Europe to buy here,” he said.

Citakovic said he knows it would be hard to get a mortgage here, so he plans to pay all cash – thanks to a previous tech company he founded, he has the funds. Getting his money out of Serbia just involves a wire transfer.

After his company takes outside financing, he would be interested in investing in real estate here, Citakovic said. “I think it’s a good investment because it brings predictable cash flow,” he said. “There’s a very limited supply in San Francisco. The way it looks right now, it’s easy to sell and things are moving quickly in case you might need to pull the money out.”

Interest expected to decline

Meanwhile, Kolko expects foreign interest in U.S. real estate to decline in coming months as prices continue to climb.

“As prices start to rebound in the U.S., foreigners are searching here less since prices are no longer quite the bargain they had been a year ago,” Kolko said.

Where foreign house hunters come from

Canada and the United Kingdom were the most common countries of origin for foreign people searching for Bay Area real estate during the 12 months ended June 30. There was some regional variation among international searches targeting the various Bay Area counties. Countries are listed in order of where the most searches originated from.

Bay Area (all 9 counties)

– Canada

– United Kingdom

– Australia

– China

– France

– Germany

– India

– Hong Kong

– Taiwan

– Japan

Alameda

– Canada

– United Kingdom

– China

– Australia

– India

Contra Costa

– Canada

– United Kingdom

– India

– China

– Denmark

Marin

– United Kingdom

– Canada

– France

– Germany

– Australia

Napa

– Canada

– United Kingdom

– Australia

– France

– Japan

San Francisco

– Canada

– United Kingdom

– Australia

– France

– Germany

San Mateo

– Canada

– United Kingdom

– Hong Kong

– China

– Taiwan

Santa Clara

– Canada

– United Kingdom

– India

– China

– Taiwan

Solano

– Canada

– Philippines

– Germany

– United Kingdom

– Mexico

Sonoma

– Canada

– United Kingdom

– Germany

– Australia

– Mexico

Source: Trulia.com

Carolyn Said is a San Francisco Chronicle staff writer. E-mail: csaid@sfchronicle.com

Article source: http://www.sfgate.com/business/article/Foreigners-shop-for-Bay-Area-real-estate-3850028.php