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US Property ?��Ǩ�� Perfect for Bottom Fishing

By Obelisk on 29 July 2009

Over the last few years, emerging markets have occupied most of the property investment scenario, but recent events in the global economy mean that developed markets such as the US are fast taking some of the limelight.

The US, a long-time favourite with British property investment, is one such example. Property in most of the US has always been affordable for the euro/sterling investor, but the downturn in the US economy has led to huge prices reductions. As a result, the US is currently offering excellent opportunities for bottom fishing.

However, according to Clear Capital, one of the leading property market research bodies in the US, there are strong signs that the seemingly endless trend of falling prices is on its way out. Clear Capital's July Home Data Index shows a quarterly increase throughout the US of 1.7%. The amount may be small but it's the first positive figure for three years and an encouraging sign that the US property market is turning around.

The last time house prices increased nationally was in 2006 and since then, US property prices have gone into free fall. Q2's figures are therefore a welcome relief. This is particularly true of the Midwest region where prices rose by 5.3% and to a lesser extent, the Southern region with an increase of 2%.

Nationally, 15 cities showed price rises of at least 3.7%, but three cities stand out in particular. They are all in the Midwest whose 5.3% increase is mainly due to the spectacular price rises in Ohio's three largest cities - Cleveland (19.6%), Columbus (15.6%) and Cincinnati (12.9%). These generous double-figures are more reminiscent of a strong emerging market than of a firmly established property investment location such as the US.

Not all regions can boast such promising figures, however, and several areas of the US are still deep into negativity when it comes to property prices. Las Vegas recorded the highest quarterly fall with a decrease of 12.4% and Orlando and Miami in the Sunshine State of Florida experienced drops of 9.3% and 4.8% respectively. Parts of California are also still badly affected - property in both Los Angeles and Long Beach saw a quarterly fall of 5.2%.

However, the West as a whole saw a Q2 drop of 0.7%, which property analysts believe to be a promising indicator that dramatic price drops are about to become a thing of the past. Until now, the West has been experiencing steady quarterly falls of as much as 10.5%.

According to Kevin Marshall, President of Clear Capital, the last quarter increase of 1.7% nationwide is very encouraging. He believes that the price appreciation is due to a combination of "foreclosure (repossession) moratoriums, first time home buyer incentives and investment activity". Mr Marshall is reluctant to confirm an end to the bottoming of the market, but he claims "dramatic price depreciation rates have been curbed".

This in tandem with the marked fall in the number of homes being repossessed means that more and more properties are now being sold for their actual market value. The nationwide increase in prices would appear to back this up suggesting that now is the time to start seriously bottom-fishing the US market. Provided the location and exchange rate are right, US investment property could be an excellent addition to an investment portfolio.

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