In recent years, the U.S residential real estate market has been attracting the eye of international investors as never before. But before you start bumming yourself out about the mansion in Beverly Hills or the dream villa in Miami you’ll never own, think again. Ever hear about the ebullient real estate market in Loganville Georgia? Euclid Ohio? Or even in Philadelphia Pennsylvania?
Probably not. But a fact’s a fact, more and more international investors are shifting their sights and thoughts from luxury to bargain-price properties in humble every day American towns.
The reason? Rebounding home prices in conventional, glory locations, along with a strengthening U.S. dollar are costing investors more while yielding less in the long term. Combine that with weaker economic growth throughout the world plus non-stop financial market turbulence and the current state of real estate reality starts making sense. “People today want better return on investment” says Mathew Yung, chief economist of the National Department of Realtors. “Investors are finally realizing that if they have no plans to live in the United States, there is no reason to own a million dollar home. Instead, they can invest in eight fully tenanted homes located in booming secondary markets and earn much better monthly returns on the same million”.
Foreign buyers purchased $120.8 billion of residential property in the U.S. between March 2015 and May 2016, according to an annual report on international activity in U.S. real estate. And although a 1.2 percent decline in dollar volume in comparison with the previous survey, the number of properties purchased, however, rose 3.1 percent to 244,685.
“The minor drop in dollar volume can most likely be accounted for based on the types of properties purchased, and their locations. We’ve seen much evidence that foreign buyers — both investors and people just looking for a home — have begun looking beyond expensive markets like Florida, New York and California, and buying properties in smaller, less-expensive cities in the Southeast and Midwest,” explains Rick McGill, executive vice president at Realextate, an online real estate marketplace.
Given today’s volatility in the financial markets, real estate is still considered one of the safest investments available. Compared to explosive property prices that are sweeping the Middle East and Asia, for investors looking to shift their portfolio in an attempt to de-risk their investment management, real estate in American secondary markets has become an inexpensive alternative offering enhanced returns with lower risk.