2013 continued to be an incredible year for foreign investors to purchase residential real estate in the US. While the economy continues to improve, the unemployment rate and its ripple effect continue to plague Americans that are hesitant in purchasing.
In the 12 month period ending March of 2013, the National Association of Realtor’s (US) reports that international buyers purchased $68.2 billion (6.3%) of the residential real estate sold in that period of time.
The highest rate for Asian investors was for the Chinese 12% of that total, followed by India at 5%. Australia came in at 2%, representing total investments valued at just over 1.36 billion. The majority of these properties were purchased for $150,000 or less. This is significant in that renters tend to want to rent homes in this price range more than any other, meaning that this is where most of the potential tenants are.
Mortgage rates, while still at historical lows, are on the way up. The federal government, and private investors continue to purchase mortgage backed securities which is keeping rates lower than they might have been otherwise. Rate swings, even while rates are as low as they are, tend to allow fewer buyers to qualify, especially those that were borderline qualified with the lower rates.
Mortgage credit qualification guidelines are similar to what they have been in recent years, with the exception of the minimum down payment for government backed mortgages (ie Fannie Mae) going from 3% to 5%. The Federal Housing Administration (FHA) loan program, known for its very liberal qualification requirements, continues to raise its premiums, making it more expensive for those looking to finance a home at this time.
Despite the decreasing number of buyers it’s clear that the market has turned the corner; prices tend to be increasing and quality inventory is becoming more scarce in many of the areas that “American Properties” does business.
As an Australian buyer, opportunities abound, for a number of reasons. With fewer buyers qualified to purchase homes, they are looking toward the rental market for places to live. With the high demand for rental homes, this tends to increase the monthly rent and reduce cashflow losses due to periods of vacancy. As distressed homeowners, and properties continue to emerge, this trend of new properties coming up for sale will continue for the foreseeable future, creating more opportunities for investment.
Another reason is that cash buyers, either from their own funds, or through Australian lending groups, tend to carry more weight in a bidding war. American mortgages, which we can help you obtain, are also a viable option for our members who wish to take advantage of leverage and purchase a more valuable property than possible with an all cash purchase.
Let us at American Properties use our expertise, and our network of professionals in the American real estate market help you find an investment property that is right for you. Contact us below for more details.