Investing in the American Property Market
This is the ultimate time for investment in the American Property Market.
A lot of people are taking advantage of the depressed prices of property which have gone down for a range of 67.5% – 72.5% since the crisis began and threw the world economy into recession.
Taking the lead in this investment drive has been foreigners. For them it is more convenient than ever to buy property in America which they would could use while they are visiting the country and then rent it out to earn a fairly impressive rental income. The widespread use of technology such as internet enables these foreign investors to look at different properties and make a judgment as to which property they are interested in. There are a number of online property brokerage houses which enables these foreigners to get the best deals even in depressed markets for a fair amount of fees. Currently there are number of countries whose citizens are extremely active in the American property market notably Japan, Canada, Britain, Germany & Netherlands.
The United States of America has been a poplar location for property investment since very long time. The property in USA currently comes at number three in terms of preference of British buyers. Despite the current slowdown in the American property market, property purchased in locations such as Disney Orlando & Las Vegas can provide healthy returns up to 30% a year.
Locations such as Texas in general and Houston in particular have been spared from the worst of the property crisis mainly due to the energy industry. It is the sixth largest metropolitan area in the country and prices are expected to remain steady over the next four years. The prices in Texas are expected to decline slightly in 2009 & 2010, but it is widely expected that it will regain its value in 2012.
In the state of Nevada, due to overdevelopment in the area, Las Vegas has been one of the worst hit areas of the downturn. In 2008, the prices in the area declined by 33%, which is expected to go down further by 24% in 2009.
Los Angeles- in the state of California- is best known for being the home of Hollywood. California has been particularly damaged in the housing crisis and the prices are expected to decline by 13.2% in 2009.
New York remains a place with one of the highest housing prices in America. The New York – White Plains – Wayne area is projected to have the third largest drop in the country, behind Los Angeles and Tampa. It is widely expected that 2009 & 2010 will be very bad years for the housing industry in the area, and then the prices are expected to stabilize. One of the major concerns in the area is the crisis in the financial industry – one of the largest employers – has had on the housing market.
Omaha (Nebraska) is home to the financial genius Warren Buffet. The area is expected to do well in the next four years. The prices of property are projected to rise by 5.5% by 2012.
The prices in Washington similarly are showing a downward trend. After a nearly 10% decline in 2008, the prices are expected to decrease further by 8.4% in 2009.
“First in, first out” is a popular phrase in the Florida property industry. In a state hit early by the financial crisis, there’s hope it will be on the leading edge of a recovery. Construction and real estate have a significant role in the state’s economy. With the collapse of the housing market, Florida was one of the first states to be victims of the financial crisis which can be witnessed from the depressed prices in the area. In 2008, the median price for a home in Lee County was more than $225,000 and in 2009 the price is less than $100,000. Those steep price declines have encouraged first-time homebuyers with good credit, and lots of investors.
In Michigan the local housing market has been severely hit due to the problems facing the auto industry. Detroit now has the lowest ownership rate for single-family detached homes of the 20 largest cities in America, according to data analyzed by longtime Detroit demographer Kurt Metzger. The foreclosure notices are plentiful in the state and houses are being sold for as less as $10,000 that once was worth at least more than 10 times more. In extreme cases, homes are on sale for $1 or less, which has attracted investors to Detroit from as far away as the United Kingdom and New Zealand. Outside buyers are flogging to take over the deteriorating housing stock of a city that because of its once mighty auto industry boasted one of the highest owner-occupied housing rates in the U.S. And unlike many large cities, Detroit’s single-family homes dominate its landscape, not high-rise apartment buildings.
“The average sales prices of such homes plunged from $46,702 in 2003 to $8,692 last year. Through the first month of 2009, average sales were $6,035” according to business website MSNBC. The outside investors aren’t only interested in Detroit, but it’s been targeted because of the sheer volume of homes and the fact that values have fallen so much more than elsewhere.
The interest rates for 30-year home loans are continuously declining and are close to a record low which was reached in the spring of 2009. This provides a very good opportunity for borrowers to buy property as the interest rates are low. The mortgage rates in September 2009 for 30 year fixed mortgage were 5.04%, above the record low of 4.78% during the spring season.
Sung Won Sohn, an economics professor at California State University, Channel Islands said that “Mortgage rates are likely to stay low for another six months or more, because the central bank does not want to imperil a recovery in the housing market.” According to MSNBC a stunning stunning 48 percent of the nation’s homeowners who have a sub-prime, adjustable-rate mortgage are behind on their payments or in foreclosure
All the factors combined present a very attractive opportunity for foreign or even local property investors. There is no doubt that the housing market is depressed but the housing market will surely rebound in the future. The housing market no doubt is in a “trough” stage of the business cycle and in a few years it will step into the “expansion” phase. It is highly recommended to buy property in places like Detroit, where the prices have declined very sharply.