A Strong Dollar Has U.S. Buyers Flooding Overseas Housing Markets

John and Felicia Magliula are self-acknowledged adventurers, but now that they have two young daughters, they're settling down. Just not in New Jersey where they grew up.

We decided we wanted to move to the Caribbean and St. Croix rose to the top when we started our research because of its diversity, its culture, and vibrant agricultural community, said Ms. Magliula, 32. Wherever we invest and live, we want to become part of the community.

The couple purchased a hilltop estate inSt. Croix,one of the U.S. Virgin Islands, for $1.4 million early in 2022. The 4-acre property has seven bedrooms, seven bathrooms, and a guest cottage that the couple refurbished for short-term rentals.

We've lived in numerous places and traveled a lot, then we started investing in rental property in Denver about six years ago, said Mr. Magliula, 38. We have property managers in Colorado and New Mexico, so we can manage them from anywhere.

The Magliulas aren't alone in their interest in living and investing abroad. In fact, 92% of high-net-worth Americans actively looked at real estate overseas in 2022, according to survey data fromColdwell Banker Global Luxury's 2022 Trend Report, and 67% of those surveyed already own residential property outside the U.S. Data from Wealth-X included in the report shows that the number of high-net-worth-individuals who purchased a home overseas in 2022 is estimated to be 14% higher than in 2021 and 29% higher than in 2019.

We saw renewed interest among wealthy investors in international buying in 2022 in part because of built-up demand after not traveling for years, said Michael Altneu, vice president of global luxury for Coldwell Banker Realty in Los Angeles. Plus U.S. economic conditions were more challenging in 2022, so investors looked for strength abroad and wanted to expand their borders.

Surging prices for homes in the U.S. and the rising cost of living in 2022 also encouraged more affluent buyers to look for opportunities overseas, according to the Coldwell Banker survey.

Social media, meanwhile, has helped make moving overseas less intimidating, said Kelly Cutchin, country manager USA for Moneycorp Americas in Orlando, Florida

We all started to see our neighbors with homes in Portugal or Paris, which made it seem more obtainable for ourselves, Ms. Cutchin said. TV shows like 'Emily in Paris' and 'Below Deck Mediterranean' and 'House Hunters International' also gave everyone an insight into how it's possible to live overseas.

Younger people today have more wealth than earlier generations because of inheritances and self-made fortunes, and they're focused on diversifying their portfolios with international real estate, Ms. Cutchin said.

We started noticing more high-net-worth individuals looking overseas as early as 2017, especially younger people who want to move overseas and investors, said Lief Simon, co-owner of Live and Invest Overseas with his wife, Kathleen Petticord, who split their time between Paris and Panama. Many of the investors are looking for a vacation home that pays for itself through rental income.

While the pandemic and its forced lifestyle changes encouraged many people to think about where and how they want to live, Mr. Simon said that some people were looking for a place where they could bug out if the world fell apart even before Covid.

The pandemic brought out in full force the idea that life is short, leading more people to want to embrace the idea of what else can I do? Ms. Petticord said.

People who have more money can follow through on that and now what could have seemed reckless years ago seems less crazy, she added.

Global Locations Appealing to Americans

The top-three locations U.S. luxury buyers would consider when purchasing a property abroad are Central America, North America (Canada and Mexico), and Asia, according to Coldwell Banker's survey. In Central America, the top three countries where affluent buyers are more likely to purchase property are Belize, Costa Rica, and Panama, according to the report.

We've seen widespread interest in buying almost everywhere, especially in France and Monaco, Italy, Costa Rica, Spain, and Portugal, Mr. Altneu said. There's immense interest in countries that offer a 'golden passport' that provides citizenship or a visa for both primary and secondary residences.

Mexico and Costa Rica have always been popular places for Americans to buy property, but both countries also reopened more quickly during the pandemic, which added fuel to the intensity of interest there, according to Mr. Altneu.

We've seen a lot of people buy one place for themselves in Costa Rica and then two or three others as investments, Mr. Altneu said.

While some people spend millions of dollars on one property, it's becoming more common for some to spend millions on a portfolio of properties in various locations, Mr. Simon said.

One couple we know has purchased properties in seven countries in the past 18 months and plan to buy more, Mr. Simon said. That lifestyle pays for itself because they rent out the properties when they're not using them.

France is particularly appealing for vacation homes, said Ms. Cutchin, while Portugal's Golden Visa program entices people who want to live there full-time.

Europe feels like a safe investment to many buyers, especially if they are skittish about the changing political climate in Latin America, Ms. Cutchin said.

The golden visa provides permanent residence status and a path to citizenship to everyone in the family if you buy property in Portugal, Ms. Cutchin said. Spain and Italy are also popular with American buyers, especially once the euro and dollar hit an almost one-to-one exchange rate.

For those who plan to stay in one place and work remotely, it's important to check out the visa and immigration rules.

Many countries allow a one-year renewable residency permit as long as you can prove you earn a minimum income, Ms. Petticord said.

Top Considerations When Investing Abroad

Whether buyers want a second home or a primary residence, they all want to make a good investment, Mr. Altneu said.

Most buyers look for places with access to good healthcare, low crime, and if they have children and plan to live there full-time educational options, Mr. Altneu said.

Healthcare and health insurance are critical to evaluate, especially if you plan to live abroad full-time, Mr. Simon said. Some travel policies can be merged with Medicare for older people, while younger people typically buy local health insurance. Many people simply pay out of pocket, especially because healthcare is often less costly in countries other than the U.S.

Transportation is important, too, because a property that's less accessible will be harder to rent to vacationers and the owners are less likely to use it, Ms. Petticord said.

You need to really understand the closing costs and transfer taxes when buying overseas, along with carrying costs such as property taxes, maintenance, and a property manager if you plan to rent out the property, she said. If you're in a tropical climate, you may need to run the air conditioning and a dehumidifier even when the place is empty.

If you buy a fixer-upper or your overseas home needs a repair, be prepared with recommendations from a local real estate agent or property manager, Mr. Magliula said.

Don't move any money or sign anything until you speak to a tax accountant and attorney locally and in the U.S. about buying property in another country, Ms. Cutchin warned. You don't want an unexpected tax bite after it's too late.

At the same time, you need funds available for a deposit when you're ready to buy.

Most banks won't do international transfers without you being present in person, so you need to preload an account with funds before you go overseas if you think you may buy property, Ms. Cutchin said.

Be aware of the exchange rate and shop around for the best rate, Ms. Cutchin recommended

Banks offer the worst exchange rate, and the rate makes a huge difference with a big purchase such as a house, Ms. Cutchin said. Moneycorp and other companies can lock in an exchange rate for two years and monitor the exchange rate on your behalf while you look for property.

Buying property overseas may be trendy, but it takes more than a whim to make a smart international investment.