USA Property Market Overview

Like the UK the US property market follows a similar story (or should that be the other way around?).

When the market is doing well it’s a great investment opportunity to be part of and usually has good fundamentals (eg good finance, demographics, economy).

The US property is vast and laws, regulations, taxes and types of home vary widely, not just between states but within each state. Hence in this short report we can only generalise at best.

The credit crunch, and sub-prime mortgage lending, originated in the US. Many banks and mortgage companies have taken significant losses. Foreclosures are taking place by ever increasing numbers every month and prices are dropping rapidly, particularly in the states of Florida, Nevada, Arizona and California (which are also the same states that had the shown the highest price growth and the worst level of sub-prime lending).

Foreign investors have already been buying large numbers of US homes (partly fuelled also by the weak dollar), many of whom could get caught out by buying too early.

Prices are likely to fall further, though during 2009 there could well be some interesting buying opportunities in the US, especially if mortgage finance improvement, the economy picks up, inflation can be contained and base rates stay around their historically low current level. For now though we are watching from the sidelines with a close eye on the market.