Many investors in Hong Kong are increasingly buying overseas property – other than buying property in popular destinations such as England and Australia, foreign buyers also have a growing interest in the United States. Whether you are looking for property that generates positive appreciation or high rental yields, the US may be an interesting investment opportunity for you.

Prices nationwide still remain low

In the years 2008-2009, the US experienced the worst economic recession since the 1930’s, resulting in a significant real estate price correction in many cities. However, the decline of real estate prices came to a halt in 2012 and prices have rebounded since then. According to a data report from May 2014, US home prices have increased by 9.3% year-over-year (source: press release by S&P Dow Jones Indices). However, big cities such as San Francisco and New York have seen a much higher appreciation over the last 12 months (12% and 18% respectively).

Generally speaking, median prices remain at or below the peak in 80% of counties nationwide (source: research carried out by RealtyTrac in June 2014). In other words, the data shows that this offers good opportunities for investors looking for appreciation potential. CaseLogic Case-Shiller (a well-respected price index of 20 metropolitan cities) is expecting a nationwide increase of 6.8% in median home prices for the year 2014. Low interest rates combined with a limited supply of properties are key reasons for this continued level of appreciation. In many areas, it is possible to gain a much higher appreciation.

Rental yields are attractive

Investors who prefer to focus on rental yields rather than appreciation can also benefit from a wide range of options in the US real estate market. Net rental yields of 8-10% in middle-class neighborhoods can be easily achieved, while certain places such as Detroit can offer rental yields of 20% or more, but with underlying capital risk.

The underlying reasons for the attractive rental yields is the relatively low purchase price of properties across many places in the US, low levels of rental vacancy rates (8.3% nationally) along with increasing rental income.

International interest in the US real estate market is rising

International investors have taken notice of the attractive returns that are feasible in the US real estate market. Based on a report published by the National Association of Realtors in July 2014, sales volume to international clients has increased by 35% from the year 2013. As prices are expected to continue to increase, market confidence remains high, especially for international buyers.

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