United States property market – sale now on!

For the property investor seeking favourable market conditions in a historically robust marketplace where there is opportunity for short, medium and long-term gains, the United States currently epitomises these conditions and quite possibly represents the ultimate in immediate investment opportunities.

According to present attitudes and expert opinion in the real estate and investment industry, the property market in America is potentially at the most attractive point in its cycle and now could very well be the right time to buy-in.

The main facts supporting this attitude are: -

- The property market across much of America is stagnating and in certain states it is in or approaching recession, which means prices are falling making a buy-in more cost and profit effective

- Even in spite of dollar gains made recently, the pound and euro remain stronger buying currencies in the US

- Record numbers of foreclosures have created a situation where an abundance of relatively cheap property is available for sale in the United States

- Demand for housing in the US is not abating with rental demand in states such as Louisiana, Alabama and Mississippi - which were severely affected by Hurricane Katrina - massively outstripping currently limited supply

You can add to all of these already well-known and greatly discussed truths some additional factors that also point to the reality that the United States is currently an incredibly attractive market for property investors looking for a familiar market built on extremely strong fundamentals.

For example, leading US economist Dr. Fred Foldvary commented in a recent lecture series and subsequent articles that, according to the widely accepted 18-year economic cycle that exists in the US, 2008 is the point at which the housing market in America will reach rock bottom. His findings are based on extensive research dating back to the early 1800’s and relate directly to everything from the pattern of the US economy to the pattern of the housing market, from land prices to capital goods pricing.

For the nervous investor this may sound like 2008 is the worst time to buy-in, but again according to expert opinion, quite the contrary is true.

For a start, leading research spanning almost fifty years highlights the fact that historically speaking, investors who have committed to market entry during presidential election years have made substantial gains – and 2008 is a presidential election year. Additionally, leading US investment strategist and author Michael J. Mauboussin points out that those who were ‘brave’ enough to buy stocks and shares in property development companies in the US in the 1990’s - during and immediately following the last real estate crash - were in a position to enjoy exceptional returns over the short, medium and long term.

Now add to this current consensus of opinion some wise words from legendary investor Warren Buffett who stated that one should be ‘fearful when others are greedy and greedy when others are fearful,’ and it’s clear that constant discussions of economic turmoil in the US represent an excellent time to strike out and buy-in, especially if you are buying-in with a currency other than the US dollar.

However, before investors rush out and begin buying property anywhere in America it is incredibly important to note that the housing market and overall real estate economy in the US has to be broken down into fifty separate pieces. Each state in America has its own underlying factors affecting it, each state can and should be viewed separately; furthermore, specific due diligence relating to the fundamentals driving and affecting the market have to be carried out on a state by state basis.

As mentioned earlier, some of the states in America where there is currently an attractive set of market conditions for investors to buy into are within the Mississippi Gulf Coast area. This is an area of the nation that was devastated by Hurricane Katrina in 2005 and where there is also a high-density population demanding new rental accommodation.

In December 2005, the US Government enacted the “Gulf Opportunity Zone Act”, (known as the “GoZone”), to cover the surrounding areas affected by the hurricanes. Covering several counties, this act includes subsidised land for developers. Individual investors get guaranteed low prices; subsidised guaranteed rental income and high tax benefits that removes the burden of both income and capital gains taxation – even for non-US citizens.

Governmental and taxation incentives have been created to encourage corporate investment resulting in leading companies such as BAE Systems, Applied Technologies, General Dynamics, Lockheed Martin and Rolls-Royce Naval Marine Inc. bringing high employment to the region in a bid to attract new people to the area and to improve the lives of those affected by the hurricane. Also the Government is actioning huge expansions of the Military Installations of Keesler Air Force Base, Stennis Space Center, and the Atlantic Fleet Seabee Base.

In addition, 22 Vegas-style Casinos are being built in a new resort area along with hotel and entertainment centres. 11 Casinos are already open and a recent report shows visitors are already exceeding Atlantic City. Casino employees are being “bussed in” from over 100 miles away simply because there is no suitable accommodation nearby.

Speaking about the opportunities in the Go Zone, Danny Silver, who’s the Managing Partner of Property Direct America and an expert on the region, recently commented that: “clearly in a location with a housing shortage, an ever-increasing demand for accommodation, increased employment opportunities, slowly growing local affluence and where house prices are particularly affordable, and where developers are starting to construct new real estate, there is a perfectly ripe market for immediate property investor entry. Entry into the market is as low as £68,000 with a 70% LTV mortgage available for a 3 bedroom, 2 bathroom house.”

To learn more about the GO ZONE, visit propertydirectamerica.com.