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The Sun Shines on USA Real Estate as the American Property Market Booms
July 25, 2013Article by Ray Withers
The US real estate market is beginning to boom again, with the latest industry data showing the most significant global acceleration since the heyday of 2006/2007. Lawrence Yun, chief economist at the National Association of Realtors (NAR), tells us: “Recovery is strengthening. The housing numbers are overwhelmingly positive.”
“Overwhelmingly positive” numbers
House price figures from the Global Property Guide show a rise of 8.31% during the year to end Q1 2013. The Associated Press also reports a 12.2% jump in US home values in May 2013 from a year ago. Data analytics specialist CoreLogic reveals foreclosure inventory has dropped 24% year-on-year and RealtyTrac Inc. says repossessions are at the lowest level since July 2007.
A perfect combination of factors
Since the US property crash, the market has offered a perfect combination of incredibly-low purchase prices and high rental demand. It is also popular as a safe haven investment which can be sold on, either as a performing investment or to new US homeowners, when the market picks up again. At the bottom of the cycle values averaged 49% of their 2006 peak prices, with some areas (such as Florida) offering up to 70% discounts from peak. Rents, meanwhile, skyrocketed as the rental market was flooded with Americans who had lost their own homes in the crash.
International investment plays big role
International investors are playing a big role in US property market trends, further putting upwards pressure on the rising prices. According to figures from real estate website Trulia, foreigners conducted 4.3% of all searches for US properties from April 2012 to March 2013. Interest from Chinese investors is particularly notable, as NAR reports China accounting for 12% of the total investment in the US property market today, compared to just 5% five years ago.
How to ride the upwards trend
As the market trends upwards, the window to buy at the lowest prices starts to close while new investment opportunities emerge. The still-affordable prices mean it is now cheaper for Americans to buy than rent. However, there is still very little new home construction as build costs are typically higher than property values. This means Americans are now seeking high-quality, renovated homes to buy, as well as rent.
Ray Withers, Property Frontiers CEO, explains:
“It really is a case of one door closing while another opens and, if you time it right, you can take advantage of both. A word of caution though – it can be challenging to invest internationally, so we recommend you work with partners who know the market and who you can trust. We’ve been watching the US property market closely since the last boom and have developed a tailored strategy to take maximum advantage of today’s trends.”
Contact us to receive your free fact sheets on the US property market and discover how you can gain fixed returns up to 80% over five years with our hands-off, buy-renovate-sell strategy.
Investments start from just £25,225 and these bonds are SIPP-eligible, with a defined exit strategy and security held by an FSA-regulated UK trustee.