I hope you’re not thinking of investing in USA real estate.
Despite all the difficulties they are having over there, there is still a bunch of promoters recommending Australian’s buy cheap properties there.
Because of all of the hype about US property I’ve already posted a few blogs why I feel it will be a sure recipe for disaster. But now there is even more bad news confirming the parlous state of the US property market.
With all the worries of the US falling into recession again as well as the high unemployment rates over there, it came as no surprise when a recent article in the Los Angeles Times reported significantly more properties entered the foreclosure process during August in the US.
Foreclosure filings nationally — default notices, scheduled auctions and bank repossessions — were reported on 228,098 U.S. properties in August, a 7% increase from July, though still down nearly 33% from August 2010, according to RealtyTrac.
It wasn’t that long ago that Ben Bernanke, Chairman of the US Federal Reserve, recently stated that more than 20 per cent of US borrowers owed more than their homes were worth at present and an additional 33 per cent had equity cushions of 10 per cent or less, putting them at risk should US house prices decline much further.
Around this time last year I wrote a blog suggesting people thinking of buying US properties take head of a warning made by Rupert Murdoch, one of the smartest business people around. At that time he warned that the US economy will be at a standstill for almost a decade and will not start growing again until the small business sector starts to recover.
“There’s humongous unemployment. At least 30 million are either looking, given up looking or have half the job they had before. And it will get worse,” Murdoch said in an interview with the Australian Financial Review at the time.
“American never gets a recovery without small business starting up in a big way. They are the ones who employ people.”
“Big corporations, they just cut or buy out the competitor. People who take a mortgage on their house to start a business, maybe employ 40 people… now they think, let’s wait and see.”
“People are terrified they will be the next to be unemployed.”
Murdoch also hit out at US president Barack Obama, accusing him of refusing to listen to advisers and business leaders.
With more unemployed and a further 3 to 4 million houses predicted to go into foreclosure, it’s best to stay clear of the USA.