USA Property Market – Overview

S+P/Case Shiller US National Index
The average house price recorded as increase of approx. 131% from 1st quarter 1997 – 1st quarter 2006 (9 years)
One factor: increase in mortgage lending – particularly subprime mortgage lending (rose from less than 8% in 2003 to more than 20% in 2005/2006)

Property Demand
Young and growing population
Population growth is a key driver which underpins total demand for housing
OECD estimates by 2030, US population will be 373.5 million (annualised growth rate of 0.98%/annum). Growth to be driven by strong net migration in the US. This is one of the strongest growth rates among OECD nations.

Demographic Profile
Info from US Census Bureau shows increases in level of home ownership occurs rapidly between the ages of 25 and 45.

Currently (2011), 47% of population sits in the under 35 age bracket
Based on historical trends this group is on the brink of entering into the main home ownership stage of their lives which will result in upward pressure on total home ownership rate and provide long term support to property purchasing demand

Housing Starts
Housing Starts in the US (2011) are lower than at any time in the past 30 years
According to Joint Centre for Housing Studies of Harvard University based on current projections of long term demand, the US requires approx. 1.25 million new single family homes per annum. In comparison, current total housing starts are approx. 571,000/annum

a) Current low level of housing starts will assist in depleting existing excess housing stock
b) Once demand does recover (if it recovers rapidly) new supply growth may be slow to react from its current depressed levels. If so, the market will remain under-supplied for a significant period of time, and may not provide the catalyst for significant improvement in prices.

US property prices are still at record lows in many of our preferred investment markets.These incredibly low purchase prices are a result of the spate of foreclosures (repossessions) which has swept the States after the 2007 property crash. This provides a great opportunity for investors. Simply, investors can buy foreclosed property at rock bottom prices and then rent them back to the growing US rental market.

The tide is turning but recovery is slow.
Although the number of foreclosures has reduced, American consumers remain concerned about the direction of the economy and therefore remain wary about undertaking the financial obligation of home ownership.
Looking forward, the biggest indication that the US home-owners’ housing market is beginning to normalise is a diminishing number of delinquent loan payments. While this is a slow process, data from credit reporting agency TransUnion indicates this is beginning to happen. 
 Unemployment rate is falling
The US employment market is beginning to pick up again and figures released at the end of 2012 indicate unemployment was at its lowest for three years. New jobs spur household formation, but the still-constricted lending standards continue to prevent many Americans from buying their own homes. So, despite the housing market taking a slow upwards turn, the current rental and market trends will continue for the time being.
A buoyant rental market typically means generous rental income – particularly when teamed with the low property prices available in the USA. In some locations investors can expect 15 -20% NET returns per year . By 2013 rents had been rising for four consecutive years and industry analyst Axiometrics predicts “more annual increases with 10 years of a strong [rental] market.”
US dollar 
The US dollar is still regarded as a ‘safe haven’ currency. Of all the international economies, regardless of a recession, the USA ultimately has the largest and most powerful economy in the world.
So, although property is more affordable than ever, home ownership is at its lowest level in the USA for 13 years. This creates an ideal environment for buy-to-let investors, as you are buying at the bottom of the property market prices, but letting for high rents, accelerated by the huge demand.
Exchange Rate AUD-USD

Average since floated in 1983 = 0.749

US Property – Commentary 
Warren Edward Buffett: American business magnate, investor, and philanthropist
In an interview with CNBC on MondayFebruary 27, 2012 , Buffett said single-family homes, along with stocks, are cheap and attractive investments. When asked if a young individual investor should buy stocks or his first single-family home, Buffett recommended buying a single-family home with a 30-year mortgage.
“ It's a terrific deal, he said. It's a leveraged way of owning a very cheap asset now and I think that's probably as an attractive an investment as you can make now”.
American Professor Chris Mayer : Professor Mayer is “The Paul Milstein” Professor of Real Estate and Finance and Economics at Columbia Business School. His research explores a variety of topics in real estate and financial markets, including housing cycles, mortgage markets, debt securitization, and commercial real estate valuation.
 Best Value Play in America : By Chris Mayer, editor, Capital & Crisis  Saturday, February 18, 2012 
“Put simply, U.S. housing is the best value play in America. If you own a house, look to buy and rent another, or invest in a partnership that gets you exposure to this asset class”.  
However, as recovery accelerates, the window of opportunity begins to close so the best time to act is now.