I am not a big fan of the American property market – as you know. When you wrote to me over three years ago you wanted a property for you and your family as a holiday home and I said that I believed prices were going to go a lot lower. I know that you love your trips to America but there’s nothing wrong with carrying on renting – at least this way you have a real holiday when you go there and don’t have to worry about DIY. I also know fro your emails that you have the cash ready and waiting, so no mortgage issues but my advice is still the same as before. Hang on. Unfortunately, in my opinion, we are still not at the bottom. Obviously this is a very general statement and the picture varies from county to county, but only as each competes to be the worse. Now is a good time to be doing your due diligence and if an absolute bargain comes your way then take advantage – but certainly don’t pay anywhere even close to “the going rate”. This story from Bill Bonner makes the point:
“I had a house a couple of blocks from here,” said a friend in Delray Beach (Florida). “I sold it in 2006 for $295,000. It wasn’t much of a house. On the edge of a bad neighbourhood. But I fixed it up.
“Well, the guy who bought it couldn’t pay his mortgage. So another friend is buying it back. Guess how much he’s paying for it? Seventy-five thousand. I’m glad I sold that when I did.”
At $75k you can’t go far wrong, that’s chump change, but unless you get a deal like this one – keep your powder dry, at least for another 12 months – maybe even then I will be saying the same thing.
Update March 2012
Yep – still as true today as it was when I wrote this article. Unless you are handed the bargain of the century, hang on as prices are still falling.
Update November 2012
I believe that in parts of America the market is now turning and this could prove to be a good time to buy. An American mortgage is extremely cheap at the moment compared with here in the UK. YOu can also lock in these low rates for very long periods of time. A few words of warning: If you are looking to rent it is vital you go over there and check out the rental market – don’t tale the agent’s word for it.