Swooping In From Overseas
Cheap Dollars, Weak Housing Market Mean Bargains for Foreign Buyers

By Dina ElBoghdady
Washington Post Staff Writer
Saturday, March 15, 2008

Stephane Torriglia flew in from Spain about a month ago to check out a rowhouse for sale on Capitol Hill and declared it the "perfect" buy for someone like him, a foreign businessman with euros to invest.

"The idea is we'll convert our euros into dollars," Torriglia said. "We can rent the place out. Maybe in five years or six, the dollar will be strong again and the real estate will gain value. It's an opportunity."

With the U.S. dollar at its weakest level in decades, international buyers are chasing housing bargains here, eager to take advantage of their purchasing power and the declining prices in some of the best-known U.S. cities.

Against that backdrop, the Washington area is luring more than the usual crowd of diplomats. Now that the dollar is cheap, the region's appeal has broadened, enticing international business types and sophisticated investors who find comfort in the area's global reputation as a recession-proof market.

Several area real estate agents said inquiries from abroad have at least doubled since a year ago, mostly from wealthy Europeans and people in such growing economies as India and Russia, where the currencies are gaining against the dollar. Some are making all-cash offers. Even Web sites are seeing a surge in page views from overseas. The international traffic for D.C. area listings was recently up 60 percent year over year on http://Zillow.com, a popular real estate Web site.

"The impact of the weak dollar on foreign demand is one of these market forces that has snuck up on us," said Jonathan J. Miller, chief executive of Miller Samuel, an appraisal company in New York. "It's been gradually gaining momentum, and the demand has accelerated as the fall in the dollar has accelerated."

The math works out nicely for Torriglia, 50, and his wife, Isabel. The euro is now worth about $1.55 -- a record high. On top of that, Torriglia has bargaining power in a down market.

The home he's eyeing belongs to a friend and former Marine who now lives in Spain. Torriglia estimates that it could be worth as much as $1 million. He has offered $800,000 and plans to put 50 percent down if the offer is accepted.

Torriglia has been working with lawyers as well as Dana Scanlon of Keller Williams Metro Realty, an agent he found on the Internet. Scanlon said Torriglia was one of three foreign potential buyers who contacted her in a single week in January. A year ago, the only foreign clients she had were relocating for their jobs, not investors like Torriglia, she said.

"The increase in that kind of buyer has been exponential. I've gone from zero to 10 nibbles since the beginning of the year," said Scanlon, who recently held a class for prospective home buyers at her Rockville office -- in French. "There are many people who seem to be casually looking, while others, like Stephane, are ready to go."

At Washington Fine Properties, interest from international buyers has at least doubled since this time last year, said Tom Anderson, the firm's president. The inquiries have not, however, translated to sales, he said.

The company is working with six embassies eager to upgrade their diplomatic residences. There's also an unusual amount of interest in Virginia's horse country, Anderson said. "We've had people from Germany and the northern part of England actually come out to see the properties."

Hasan Nazzal, who lives in the United Arab Emirates, has been shopping since December for land in Virginia where he could build a house and possibly keep horses. Leesburg appeals to him, he said, because it's close to one of his brothers, who has lived in the area for nine years.

"I see this as being for my son's future" or maybe a place for the family to gather, he said.

Nazzal, an engineer who owns an interior-design firm, said he can spend $1 million on the land.

As real estate agent Susan Safer bluntly put it, the home shoppers "are basically people with money."

Safer, who works for Tutt Taylor & Rankin Sotheby's International Realty, cited a man who spotted her firm's advertisement in a leaflet while waiting at his doctor's office in London. He picked up the phone, "and boom, he bought a house in Georgetown," she said. "Your grocery clerk in London is not going to have discretionary income to do that."

A study last year by the National Association of Realtors confirms the anecdotes. About 25 percent of the real estate agents surveyed in summer 2007 said they had more business from international clients than they did five years ago. The weak dollar was cited as one of the reasons for the uptick.

More than a quarter of the foreign buyers bought their homes with cash, and when they took out loans, they put down more money than domestic buyers, the study found.

About 26 percent of foreign buyers ended up in Florida and another 16 percent in California, with Texas in third place.

The Washington area ranked nowhere among the top 10 destinations, which does not surprise Guy-Didier Godat, an agent in the District with Evers & Co. The nation's capital traditionally has not been a hot spot for foreign buyers, he said. It lacks the vacation appeal of Miami or the it-place aura of New York, he said.

But that is changing, especially as prices in the D.C. region drop, said Godat, as he drove to Reagan National Airport to pick up a couple from Uruguay who had come to make an offer on a condominium. Bargain hunters aren't finding many deals in Manhattan, where prices have held up. Meanwhile, foreign buyers are worried about the economies of the usual warm-weather vacation spots as concern about a recession rises, other agents said. In addition, an increasing number of foreign companies and institutions have U.S. operations in the Washington area.

Philippe Rousseau, 37, moved to Bethesda last year when the French biotech company he works for transferred him to its Gaithersburg office. He originally intended to rent a house. But, disappointed with the rental offerings, he decided to buy instead because the euro was strong.

"We figured buying a house would be better for us, even if we're only staying a few years," Rousseau said. "The exchange rate made it easier for us to make a 20 percent down payment."

Alexandre Winter, who is French, moved to the District four years ago to develop a U.S. office for a software company he owned in France. He later sold the company and considered using the proceeds, as well as some money from an inheritance, to buy property in Europe. "We still have a family house in Europe, and I was thinking of buying the shares of my brothers and sisters and renting it," he said.

But instead, he's shopping with Godat for an investment property in the $800,000-to-$900,000 range.

"It makes more sense to take that money and invest it here," Winter said.