Why Invest in the USA?
The US housing market had enjoyed a boom period which peaked in 2006 and since then prices have fallen in some areas by as much as 50%. Most loans were non- recourse loans, so home owners simply returned the keys to the banks and walked away. With the effect of the global credit crunch, consumer confidence fell away and as a result the US Government under its new President announced various multi-billion stimulus packages, to help the market.
One of the most critical was the $8000 cash allowance for new buyers, which ended in May 2010. This grant helped the market to recover temporarily, but then it has fallen away sharply this summer. Thus in hindsight, the effect of the grant was to flush out future buyers and bring their purchase forwards.
The real problems with the US Housing market appear to be as follows:
- High Unemployment: current levels are in the region of 9.5%. Until unemployment falls, US consumers will not have confidence to spend.
- Surplus of foreclosed housing stock: banks are sitting on large inventories of property. However, the 6m + people who gave up their homes, still need homes to live in and in certain areas of the US, there is a critical shortage of affordable housing for rent, resulting in large waiting lists of tenants.
- Limited credit: Whilst some consumers want to buy, they struggle to get the full mortgage required, as Banks are rationing mortgages and applying strict lending criteria.
When purchasing an investment property in the US, it is best to seek a location where the prices are well below the market value, there is a surplus of tenants seeking to rent, unemployment is falling and rent yields are in excess of normal levels
One of the first and hardest hit Cities in the US was Detroit in Michigan. The City 
historically had close links with the Motor industry which had been in decline for many years, leading to rising unemployment, high levels of foreclosure and declining economy.
Now however, Detroit is enjoying an economic re-birth, with new jobs being created, waiting lists for rental homes and substantial US Government and overseas investment
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