US Real Estate: Why Even Warren Buffett Wants in on the Action

People love speculating about U.S. real estate, and a few recent reports have brought the conversation to an outright frenzy. As a follow-up to our blog post on making a U.S. real estate purchase in 2012, we wanted to take a second look at this week’s revelations to get a comprehensive picture of the U.S. real estate market. Let’s take a step back and look at some of the bigger trends.

Where to Buy

Markets with lots of foreclosures have the highest affordability rates. This make sense – an increase in distressed sales works to drive down local prices. At the end of January, RealtyTrac identified 11 cities with 50% foreclosure deals, five of them with prices below the $100,000 mark: Saginaw, Michigan; Toledo, Ohio; Memphis, Tennessee; St. Louis, Missouri; and Milwaukee, Wisconsin.

But remember that investing in U.S. real estate is more than just chasing bargain basement prices. You need to scan the U.S. real estate landscape to identify emerging markets, and that means finding areas that are showing signs of job growth and economic recovery. The February 2012 jobs report, released earlier this month, bodes well for U.S. real estate with a marked decline in unemployment for 25-34 year olds. This means an influx of young buyers with the means to purchase their first homes.

US Real EstateWhat’s Happening With Rentals

Fannie Mae, Freddie Mac and some of Wall Streets biggest players are looking into getting into the U.S. real estate rental market. Why? Because they know there’s money to be made. Even Warren Buffett, the oracle of Omaha, recognizes the opportunity in distressed single-family home sales.

This should be heartening news to Canadians looking to invest in US real estate. Rather than be intimidated by these new big players, Canadians should recognize the opportunity to pick and choose their investments based on favourable locations and job growth while Fannie and Freddie are confined by circumstance – the majority of their properties will be located in U.S. real estate markets that are still suffering the most.

California, Florida and Nevada all have a multitude of opportunities for lucrative U.S. real estate rental investments. Check out the Zillow Rent Index for more market insights.

Popular Cities for Global Investors

Investor confidence is also a huge measure of US real estate health and growth. Inman News has compiled a list of the top 10 cities showing activity from foreign buyers:

  1. Global US real estate investmentLakeland-Winter Haven, Fla.
  2. Cape Coral-Fort Myers, Fla.
  3. Orlando-Kissimmee-Sanford, Fla.
  4. North Point-Bradenton-Sarasota, Fla.
  5. Miami-Fort Lauderdale-Pompano Beach, Fla.
  6. Phoenix-Mesa-Glendale, Ariz.
  7. New York County, N.Y. (Manhattan)
  8. Honolulu, Hawaii.
  9. Tampa-St. Petersburg-Clearwater, Fla.
  10. Las Vegas-Paradise, Nev.

U.S. real estate companies are catching on to the foreign investment trends and are beginning to release tools and searches that cater to global buyers, which, to me, is an indicator that it’s going to be important to make your move sooner rather than later. As U.S. real estate investment becomes more accessible, you’ll want to make sure you beat the crowds. You don’t always have time to sleep on it.

Are you looking to start investing in the U.S. real estate market? The good news is, as always, is that there are plenty of U.S. real estate opportunities for Canadians interested in investing – you just need to know where to look and we can help you with this.

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