I hope youre not thinking of investing in USA real estate

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.



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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


'I hope youre not thinking of investing in USA real estate' have 2 comments

  1. Avatar for Property Update

    April 1, 2013 @ 9:51 pm Michael Yardney

    Congratulations Mark – well done
    Unfortunately I’ve seen quite a few Australian investors get them sells into significant problems by following the advice of a number of so called “experts” and bought for very inflated prices or in the wrong areas.
    I’m glad you did well

    Reply

  2. Avatar for Property Update

    April 1, 2013 @ 8:09 pm Mark

    I am glad I did not follow your advice. Around the time you wrote this article I purchased a house in Las Vegas. Cost me $60K + 10K for rehab.

    Got a tenant straight away, and have received $1070 a month rent every month! Positive cashflow of around $400 a month after all expenses on my $70K line of credit loan.

    And to add to that the property has increased in value to around $115-120K if I was to sell now.

    I think you should do a bit more of your own research on the ground and not rely on what everyone else is saying .

    Reply


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