Affordable Homes Abroad

Thinking about buying a nice four-bedroom house in Louisville? How about one on an island paradise instead—Aruba, say. They cost about the same—around $240,000—but Aruba has better beaches. And with home values still shaky in many U.S. markets, international property could be a better investment.
The Caribbean, Mexico, Central America, and Canada are home to some of the most affordable housing markets in the world, according to Coldwell Banker's 2007 Home Price Comparison Index (HPCI) survey, which looked at the average sales prices of single-family four-bedroom homes with approximately 2,200 square feet of space in 77 markets outside the U.S.
Coldwell Banker, which has a presence in 42 countries, seeks out high-growth international markets that, for the most part, offer political stability, a high quality of life, and a strong economic future. Other spots that made the international most-affordable list included cities in Egypt, Bahrain, Poland, Malta, China, and Colombia.
The Coldwell Banker HPCI is meant to serve as a guide for world travelers and interested consumers who want to get a sense of how much a typical home for middle managers may cost in various markets around the globe. The cumulative average sales price of the homes surveyed in the 317 U.S. markets in the Coldwell Banker HPCI was $422,343. Warsaw, with an average sales price of $417,760, was the foreign market that came closest to the U.S. average.
Baby Boomers Abroad
Colombia's capital, Bogotá, was this year's most affordable international market in the HPCI study, with an average subject-home sales price of $140,000—slightly less than what it would cost to buy an equivalent house in Canton, Ohio. Two very different cities, for sure: Canton is home to the Pro Football Hall of Fame and the burial site of President William McKinley, while Bogotá boasts striking Spanish colonial architecture and a burgeoning economy (BusinessWeek.com, 5/28/07). The choice is yours.
Or, you could have both. "More and more Americans are living abroad," says Jim Gillespie, chief executive officer of Coldwell Banker. "The baby boomers in particular are now are looking internationally to buy second homes and retirement homes."
Many Americans also choose to purchase foreign property as an investment, or relocate overseas for business reasons. HiFX, a firm based outside London that provides foreign exchange services, estimates that there are more than 500,000 relocations of Americans to foreign countries per year, with the biggest concentrations of Americans residing in Mexico (approximately 1 million), Canada (700,00), and Britain (200,000).
Beachfront for a Song
According to a recent survey conducted by HiFX, Americans who invested in overseas residential properties from 2001 to 2006 achieved investment returns that were two to four times what were generally available in the U.S.
In Mexico: Guadalajara, Monterrey, and Mexico City made our list of the 25 most affordable international housing markets, with average sales prices ranging from $246,522 (Guadalajara) to $277,213 (Mexico City). "There's been this big shift to Mexico and Central America, where the beachfront property costs a fraction of the property in California or Florida," says Doug Johnson, manager of the Private Client Div. of HiFX.
A couple can live a "comfortable, but not elaborate" lifestyle in select retirement areas of Mexico for $1,200 to $1,500 a month, according to HiFX. For non-retirees, large Mexican companies such as Monterrey cement maker Cemex (CX) are also expanding globally and taking on more employees. U.S. companies are also investing in Mexico—Intel (INTC) now has a design center in Guadalajara.
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