Paris is the most visited city in the world, (just ask vacation rental company Airbnb which lists Paris as its top market globally) and now it’s becoming a second home for many Americans. USForex, a leading global currency exchange provider, has tracked real estate transactions done by Americans in France for years.
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While the number of deals have increased steadily over time, in 2013, the number of transactions spiked to a nine fold increase from 2012. The company generated approximately $12 billion in transactions in 2014 alone for French property purchases.
And according to Paris Property Group, a French real estate group that specializes in international buyers, 9.2% of Paris real estate purchases in 2014 were not made by French citizens, the highest rate in a decade.
Historically, Italians have been the largest foreign purchasers of French real estate (25% of international buyers in 2009) and remain the majority of foreign homeowners to date. Following Italy, buyers from Algeria, Portugal and China lead the international purchases.
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But if you think that everyone is buying up French mansions, think again. According to USForex, the average size of the transactions are about 400,000 euros (approximately $446,000).
As opposed to a vacation home, most Americans who buy French property view it as an investment, according to Jason Kumpf, a real estate expert at USForex.
Kathryn Brown, of Paris Property Group, says that most of her clients who purchase French real estate are interested in renting out their houses or apartments when not in use. “Even if they are not planning to rent it out immediately, they feel it gives them more options to purchase in an area where they could rent their apartments out if they want to generate cash flow, and where resale will be optimized,” says Brown.
While freestanding homes in central Paris tend to cost millions of Euros and require extensive upkeep, the majority of buyers purchase apartments, according to Brown.
Kumpf notes that even though Americans aren’t purchasing huge homes, owning property in France carries with it a perception of luster, making the country even more appealing for buyers.
Both US Forex and Paris Property Group attribute the uptick in purchases to a strong dollar compared to the Euro. “The strong dollar combined with a softening in French prices makes French real estate quite attractive“ says Kumpf.
According to Brown, U.S. buyers tend to come from coastal areas, in particular New York and California. Brown noted that most of her clients come from North America and other English speaking countries, but the group has seen a notable increase in inquiries from the Middle East, Asia and Russia.
Along with lower pricing and currency fluctuation, the French lending environment has improved considerably over the last two years. Previously, French banks were quite cautious and some had ceased lending to Americans altogether, according to Michael Baynes of Christie’s International Real Estate.
Brown says that current mortgages in Paris are available at an interest rate of around 3% and up to 85% of loan value.
“Today we see the perfect storm for Americans. A strong dollar, a lending market that is very attractive, and a real estate market that is just starting its recovery,” says Baynes.