Why experts refer to US investment property as the best buyers market in recent history

Posted on October 12, 2012 · Posted in Chris Mansfield - Blog

The UK market may be referred to as a buyers market right now, but it does not have the strong statistical evidence as the US market does.

And that’s because UK prices are not at half of what they were 5 years ago.

US is “one of the best buyers’ markets in recent history”, says expert

Clare Nessling, a director at overseas mortgage firm Conti, said that the cost of a home across the Atlantic Ocean is now around half what it was five years ago.
Ms Nessling went on to explain that despite the drop in price, strict lending policies could stop some borrowers from taking advantage. Read more at homesoverseas.co.uk

The foreclosure rates are also dropping heavily

With the foreclosure rates mentioned below uniformly plummeting across all areas, this indicates that further drops are less likely.

More positive news on the American housing market this week, well almost. According to the latest data, foreclosure activity across the country fell to the lowest level in five years. However, foreclosures in 14 states, including Florida, Illinois, Ohio, New Jersey and New York, increased by as much as the drop in the rest of the country. These were 14 judicial states in which lenders have begun working through backlogged defaults after processing standards, fully implementing the Attorneys General agreement, took effect.

Never the less, with foreclosure filings in the 3rd quarter down 16% on the previous year, it still became the ninth consecutive quarter in which foreclosure activity has decreased on an annual basis, and left the overall number at its lowest level since the 4th quarter of 2007, according to the figures by RealtyTrac.

The West again led the charge, with filings in California down by a fifth (20.7%) on the previous month, and by almost half (48.1%) compared to the previous year. Many states hit close to this level in terms of an annual decline, including Nevada with a 40.1% decline, Oregon with a flat 40% decline, and Arizona with a decline of 37.1% in new foreclosures. Washington saw new foreclosures fall 31.2 percent from August.

Third quarter foreclosure activity increased on a year-over-year basis in New Jersey (130 percent increase), New York (53 percent increase), Indiana (36 percent increase), Pennsylvania (35 percent increase), Connecticut (34 percent increase), Illinois (31 percent increase), Maryland (28 percent increase), South Carolina (16 percent increase), North Carolina (14 percent increase), and Florida (14 percent increase). Read more at propertyabroad.com

What does this really mean for investors?

It’s a great indication that current US property investors have good potential for capital growth, however if the correct investment properties are picked in good areas which make a good return solely on net yield then capital growth can be treated as a bonus and not relied on.

If anything, it’s the low capital value that contributes to a high yield.

So why aren’t Americans buying up these properties then?

Actually, they are.

US real estate investors are filling their boots right now, but the mainstream cannot afford to get mortgages due to the currently sparse US mortgage market (as mentioned above). This forces them to rent instead and creates opportunities for capital rich investors.

Through our free consultancy, we have helped many UK property investors invest in lucrative and highly profitable, fully managed properties in the states as well as other growth areas.

If you’d like to discover how you could also take advantage of some free, friendly advice then get in touch.


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Headline image by Urbanfeel via Flickr.com