Types of Tenure:
Property in the USA can be bought on a freehold or leasehold basis.
Forms of Ownership:
Overseas buyers can purchase freehold and leasehold land or property without any restrictions
Restrictions:
There are minor restrictions on foreign ownership of real estate in
America but they are insignificant for buy-to-let investment purposes. At the federal level there are only a few restrictions on non-resident aliens (NRAs) owning or investing in real property. For practical purposes these restrictions are unimportant.
Property Rights:
The
USA scores 90% in the Heritage Foundation’s assessment of the security of its property rights. The Heritage Foundation states, “Property rights are guaranteed. Contracts are very secure, and the judiciary is independent and of high quality. The courts recognize foreign arbitration and court rulings.”
Mortgage Finance:
All 50 of the American states base their mortgage lending on affordability. To gather this information, lenders look at income vs. expenditure. The maximum loan available to borrowers is usually 80 per cent of either the purchase price or a property valuation, whichever figure is the lowest.
Banks in the USA have a minimum lending figure of $50,000 and mortgage costs can be quite expensive. Depending on the state in which you are buying and the purchase price of the property, mortgage costs could range from $4,000 to over $12,000.
UK citizens buying into the USA property market also need to be aware that they need a USA Social Security Number, a Green Card, or a US Passport in order to borrow over 70 per cent loan to value. These documents show that the borrower is registered in the US.
To borrow under 70 per cent loan to value, a UK passport will serve. Furthermore, to borrow over 70 per cent LTV, borrowers will need to prove their income. Loans under 70 per cent are typically self-certification.
Issues and risks:
Housing bubble
The United States housing bubble is the economic bubble in many parts of the U.S. housing market that began roughly in 2001, especially in populous areas such as California, Florida, New York, the suburbs of Chicago and Detroit in the Midwest, the BosWash megalopolis, and the Southwest markets. It reached its peak in 2005–2006, and has been deflating and accelerating since.
Greatly-increased foreclosure rates in 2006–2007 by U.S. homeowners unable to pay their mortgages caused a crisis in the sub prime, Alt-A, CDO, CDX, mortgage, credit, hedge fund, and foreign bank markets. The U.S. Treasury Secretary called the bursting housing bubble "the most significant risk to our economy."] A housing bubble is an economic bubble that occurs in local or global real estate markets that is characterized by rapid increases in the valuations of real property until unsustainable levels are reached relative to incomes, price-to-rent ratios, and other economic indicators of affordability.
This, in turn, is followed by decreases in home prices that can result in many owners holding negative equity—a mortgage debt higher than the value of the property. The housing bubble in the U.S. was caused by historically-low interest rates, poor lending standards, and a mania for purchasing houses.
Housing boom slowing down
The booming housing market appears to have halted abruptly for many parts of the U.S. As of summer 2006, several markets are facing the issues of ballooning inventories, falling prices, and sharply reduced sales volumes. In August 2006, Barron's magazine warned, "a housing crisis approaches", and noted that the median price of new homes has dropped almost 3% since January 2006, that new-home inventories hit a record in April and remain near all-time highs, that existing-home inventories are 39% higher than they were just one year ago, and that sales are down more than 10%, and predicts that "the national median price of housing will probably fall by close to 30% in the next three years "
Sub-prime crisis
In March 2007, the United States' sub prime mortgage industry collapsed due to higher-than-expected home foreclosure rates, with more than 25 sub prime lenders declaring bankruptcy, announcing significant losses, or putting themselves up for sale.
The stock of the country's largest sub prime lender, New Century Financial, plunged 84% amid Justice Department investigations, before ultimately filing for Chapter 11 bankruptcy on 2 April 2007 with liabilities exceeding $100 million. The manager of the world's largest bond fund PIMCO, warned in June 2007 that the sub prime mortgage crisis was not an isolated event and will eventually take a toll on the economy and whose ultimate impact will be on the impaired prices of homes.
Key Property Markets:
California
America's most populous state and economically the most powerful with its Silicon Valley industries California is a popular destination for the British. Los Angeles is the main city and the country's second largest, a beautiful place for the beautiful people where property tends to be expensive with 2 bedroom and 2 bathroom houses costing around $450,000 going up to $700,000 for a 3 bedroom and 3 bathroom townhouse on the outskirts of the main city.
Sacramento founded in1849 and is the oldest incorporated city in California has a wider range of properties with 2 and 3 bedroom townhouses from $269,000 upwards.San Francisco historic and highly cultural is where most California bound Brits like to settle. Properties are not cheap with one bedroom apartments costing upwards of $275,000 and 3 bedroom houses in the centre of the city costing $1,000,000+
Palm Beach is another quite expensive area with a 4 bedroom, 4 bathrooms detached house costing in the region of $1,800,000.
New York
The city is the most expensive area to buy property and a one bedroom apartment in downtown New York off Broadway will set you back a cool $500,000 for a 5 bedroom detached house outside the city you will not get much change from $2,500,000.
However along the Hudson Valley property starts to get more reasonable and further inland at Franklin County there are properties available from just $60,000 for a 2 bedroom, 2 bathroom apartment and 4 bedroom detached houses for $110,000.
Texas
More British migrants settle here each year than the sunshine state of Florida. With its big cities, beautiful beaches and lush back country it not just cowboys and deserts. Property prices throughout the state even in Houston and Dallas are affordable and reasonable.
Dallas property prices are around $160,000 for a 3 bedroom, 2 bathroom house rising to upwards of $400,000 for a 4 bedroom, 3 bathroom detached house. Houston 3 bed, 3 bathroom apartment for $110,000 up to $400,000 for a 5 bedroom house . Austin situated inland property prices are much lower and for $109,000 you will be able to purchase a substantial 4 bedroom house and gardens or for $90,000 a large 3 bedroom apartment
Fort Worth is equally well priced with 3 bedroom properties selling for $93,000 and 4 bedroom townhouses for $119,000. A 4 Bedroom house on a large corner plot with 2 bathrooms, 2 living rooms and 2 dining areas can be yours for around $135,000.
Florida
With its year round sunshine and relaxing beaches this is the ideal destination to purchase a new home. Because of its ever increasing popularity the price of property has risen significantly over the last few years and between July 2004 and July 2005 the increase was a massive 33%. Property prices vary dramatically throughout the state with the most expensive being those in Miami and the Florida Keys which can cost millions of dollars.
A one bedroom apartment on Lake Buena Vista a stones throw from Disney will set you back a massive $196,000 whilst a large waterfront property with 3 bedrooms and 2 bathrooms in Key Largo will cost a whopping $1,195,000. In Miami a large luxury detached six bedroom house with 7 bathrooms will be around $2,980,000.
Orlando is not as expensive as Miami but nevertheless compared to some areas this is still fairly expensive, a 2 bedroom apartment in College Park the up-market quarter of the city will cost $279,000 whilst just outside the main area a luxury 6 bedroom detached property with swimming pool, Jacuzzi and hot tub can be purchased for $350,000.
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