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Ailing USA bursts into the ‘Top of the Props’ top 5!

Interest in the USA  from visitors to TheMoveChannel.com has surprising soared over the last month, with the world’s largest economy powering its way into the top 5 of our ‘Top of the Props’ chart for the first time…

Potential investors seem to be ignoring the negativity of the ongoing sub-prime crisis and cashing in the UK’s incredible interest rate.  With two dollars to the pound, the potential for cheap bargains and doubling your money has never been better.

Downward forecasts and rate cuts

Confronted with surging oil prices and falling house prices, the Federal Reserve has cut interest rates three times in the last four months, with the latest cut seeing a further 0.25 lopped off to bring the current rate to 0.25%. The cuts, designed to stimulate economic activity and keep the US from dipping into a recession, have also helped the pound soar to a 26-year high against the dollar.

Housing market struggles persist, and the National Association of Realtors has highlighted the fact that U.S. existing home sales to be 10.8 percent lower than last year.  In its October report, the association predicted 5.78 million existing homes would be sold in 2007, down from 6.48 million last year. Last month, the association predicted an 8.6 percent drop from a year ago.

The number of home repossessions in the US has also soared, with property firm RealtyTrac reporting a massive 93% jump in people filing for repossession in July alone. The figures will make worrying reading for many analysts as problems in the US mortgage market have triggered a global credit crunch and drop in share prices.

Other data showed higher job losses in the construction and property sectors. Falling sales and decreasing prices have made it harder for homeowners who have hit difficulties to sell their homes and clear their debts.

Light at the end of the tunnel

It’s not all doom and gloom though!  Savvy investors have identified several areas of the USA that are seemingly immune to the ongoing sub-prime woe.  Wyoming is one such market that continued to see double-digit growth.

According to the Office of Federal Housing Enterprise Oversight (OFHEO) Wyoming ranked fourth in the nation in highest percentage change in housing prices with a one-year increase of 11.67 percent from first quarter 2006 to first quarter 2007. Its five-year growth rate, 60.96, is well above the national figure of 53.53.

An OFHEO spokesperson commented: “The overall market had the second best showing, for number of sales, in over twenty years with 464 transactions in the first six months of 2007. But the dollar volume stole the show with a 30% increase to $826 million and a healthy increase in the average overall sale price, up 28%.

Additionally, a survey of vacation-home buyers by the National Association of Realtors (NAR) conducted in April 2007 showed that 80 percent of second-home buyers considered it a good time to invest in real estate, compared with 57 percent of primary residence buyers.

The NAR study also showed that 25 percent of second homes were in the West, and of those, 67 percent were detached, single-family homes. “Second homes are really something of a misnomer because a fair number of respondents buy multiple properties,” David Lereah, NAR’s chief economist, said in the survey report. Twelve percent of vacation-home buyers owned two such homes and 2 percent purchased three or more vacation properties.

Lone Star State soars

Texas also continues to dodge the US real estate bullet, outperforming expectations with house prices and sales performing much better than in any other part of the country.

Real Estate is where gold used to be fifty years ago. It is the only form of investment which offers a secure steady return for the future and a guarantee of some kind in times of uncertainty. Like most forms of investment like this Real Estate also goes through cycles of rise and dip and for most of the continental United States the dip effect is very much in force.

Texas is the exception. While house prices have showed a little decline in the Lone Star State the trend there is very much against the rest of the country and the realtors’ mood is buoyant.

Recent figures from the Office of Federal Housing Enterprise Oversight, showed that home prices in Texas increased 6.9% during first quarter 2007, well above the 4.3% national average.

2008: The recovery begins

The long term outlook for the US is seemingly positive, with house prices expected to recover in 2008. Lawrence Yun, NAR senior economist, said a good buyers’ market has evolved. 

“Buyers now have an overwhelming advantage given the wide selection of homes available in many markets,” he said.  “But with profit margins coming under pressure, homebuilders will limit new construction well into 2008.  This should help the overall inventory level to move steadily into a more balanced state.”  

Existing-home sales are expected to total 6.11 million this year and 6.37 million in 2008, down from 6.48 million last year.  New-home sales are projected at 865,000 in 2007 and 878,000 next year, compared with 1.05 million in 2006.  Housing starts, including multifamily units, are forecast at 1.43 million units this year and 1.44 million in 2008, down from 1.80 million last year.

Similarly, existing-home prices are likely to rise 1.8 percent to a median of $222,700 in 2008 after a 1.4 percent decline this year to $218,800.  The median new-home price should rise 2.2 percent to $245,400 next year following a 2.6 percent drop in 2007 to $240,100.

“Markets that sharply reduce new construction in 2007 will generally experience respectable price increases in 2008,” Yun said.  “Local conditions vary considerably, but with historically low mortgage interest rates this summer and sustained job gains, it could be a good time for first-time buyers with a long-term view to test the housing waters.”

Other risers and fallers

Italy usurped France at the top of chart for the second time in three months, casting more doubt on France’s prospects of retaining top spot in the long term.  Bulgaria, Thailand and Malta continue to rise steadily up the chart, with Bulgaria (5^nd place) hot on the heels of plummeting France (2^nd place) and threatening to usurp the perennial top dog in the near future.  Egypt shot up 6 places to crash into the top 10 for the first time, landing in 7^th place, ahead of the more established markets of Portugal and India.

Countries which fared less well this month include Germany (Down 6 places to 15th), Spain (down 2 to 4th^th) and Cyprus (down 5 to 8^th ).

To view current opportunities in the Moroccan property market, go to:
http://usa.themovechannel.com/property/

To view the TOTP chart, go to:
http://www.themovechannel.com/features/top-of-the-props/default.asp 

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