subject: What´s so good about the USA property market? [print this page] Whats so good about the USA property market?
If you can find a high quality and undervalued property in Florida right now, itll probably turn out to be one of the safest and most profitable property investment youll ever make. Consider these three simple questions:
Where else can you honestly say that prices have undergone a huge purge, have already hit the bottom of the cycle and are starting to show real signs of recovery?
Where else can you buy a completed and fully functional property at a 75% discount that is rented out to locals year round at a double digit yield?
Where else can you purchase a property knowing that your freehold title is regulated, guaranteed by the state government and that mandatory title insurance is provided?
Very large price reductions will quickly stimulate demand and recovery in the best areas:
I think most of us will agree that prices at the top of the housing boom were irrationally high as emotional investors got swept up in the hype and frenzy - but I also think the opposite is now true. The bubble has burst and prices are much lower than the fundamentals suggest they should be. Markets (crowds) tend to overreact both when times are good and when times are bad.
Take the community we are currently promoting: two bed condos used to sell in our Mosaic development at $335,000 per unit back in 2006. That was too high. They are now selling for $92,000 - that a 73% drop. In my opinion, that is a discount is far higher than it should be. The drop in the one beds in Mosaic was even more excessive - 77% (from $260k to $61k per unit).
A yield is often a solid indicator that a property is undervalued. If you are happy with a 10% net yield and are willing to wait until credit and economic growth returns to the worlds largest and most dynamic economy, then these properties will do extremely well for you. At the moment, they are hovering somewhere around 2002 prices. Even if they are at 2004 prices two years from now, youll still be looking at a sizable (30-40%) capital return.
