The fourth industrial revolution has long impacted the American real estate market. Living in a world that is moving more and more towards technology and self-automation has made investing across sectors more plausible. The increasingly emerging investing methods have, in particular, led to an increase in the number of investors in the real estate market. The United States, in particular, remains to be of the leading countries to have translated technology into profit generating real estate investments.
American real estate is an example of how the fourth industrial revolution revolutionized and developed our economy. The advancing technologies and industries have paved the way for the creation of more modern real estate investing methods. REITs and Airbnb among other modern means of real estate investment continue to surpass other traditional means. Today, the pool of real estate investors working with these modern methods has grown to include many foreigners, baby boomers, young entrepreneurs, and millennials.
Here, we have formulated a list of the reasons why American real estate remains very attractive. If you have money that you want to invest in real estate, we advise that you invest it in the US housing market. Below we explain and unfold American real estate and our explanation of the rationale.
The World at a Glance
The recent Financial Global Crisis and the Brexit have negatively impacted the real estate market in the UK and other European countries. The devalued foreign currencies and slowing economic growth in Asia and Europe, moreover, have incentivized real estate investors to look elsewhere. Asian investors, for example, continue to prefer to invest in American real estate given how relatively cheaper they find it. Actually, economists anticipate that foreign investors will come to constitute a larger share of the real estate market in the coming years. This can be explained by the strong and stable economy, the reliable legal system, and the increasing construction efforts in the US.
The country continues to attract investors in the real estate market, in particular, because of the low interest rate and inflation that the country has been seeing. Data shows that within one year, from mid-2006 to mid-2017, foreign real estate investors and immigrants have purchased about $153 billion in residential real estate properties. Large of a number, it is about 49% increase from that of 2016 of $102 billion. This increasingly high number can be explained by recent turbulence in worldwide economies along with the Brexit events.
The US Economy
We have highlighted that the United States’ economy has driven demand for American real estate worldwide. Today, the United States is considered the world’s wealthiest country and largest economy. A strong and growing economy is translated into growth across sectors and real estate, in particular. According to a report that PwC did, the US was, “cited as providing sustainable economic growth, the rule of law, transparency and relative overall security for investment.” Foreigners, even when geographically far and unknowledgeable of every detail of the US markets, yet remain comforted to trade in the US given the transparency and overall security.
US GDP has been growing and seen as favorable for foreign real estate investments. Employment has been on the rise. Economists expect the unemployment rate to drop to 4.5% by the end of 2017. Indeed, American real estate today looks healthy, given the steady and stable economic growth. Home prices, moreover, are forecast to increase further. Thus, we encourage you to invest in American real estate before prices rise and catch up to worldwide values. Make sure you do plenty of research regarding top real estate investments, especially if you are currently not residing in the US. Visit out website Mashvisor to unleash prolific knowledge.
Real Estate Investment Trusts (REITs)
Real Estate Investment Trusts (REITs) are another reason why many investors, foreign and non-foreign, continue to invest in American real estate. In fact in 2016, REITs in the United States were sopping up cash inflows. But what are REITs? REITs are a type of security that invests in real estate properties and often trades on a major stock exchange. They work like a mutual fund where both big and small investors invest in a managed pooled property.
Shareholders of REITs benefit from REITs as much as stockholders benefit from stocks. This is because when you invest in a REIT, not only do you own a share of the value of the real estate property, but you also come to earn a share of the income that the property, if it is an equity REIT, generates. This is more advantageous because you do not have to buy or finance the real estate property. Investing in equity through REITs is one type of REITs. Other types include mortgage REITs and a combination of both equity and mortgage REITs.
Not only is the nature of REITs attractive to foreign and non-foreign real estate investors, but the continuous modifications to the law has made this investment strategy even more accessible. In fact, changes that legislators made to the Foreign Investment in Real Property Tax Act of 1980 last December focused on the inclusion of more foreign real estate investors. Legislators have enforced a tax exemption making it cheaper for foreign stock funds and REITs to buy American real estate. This is advantageous for real estate investors worldwide, particularly in Europe, who struggle with zero yield and negative interest rates. Instead of investing in low yielding debt, domestic equity, or foreign currency bonds, REITs – whether mortgage or equity – have come to offer more financial benefits.
The United States remains a top performing economy worldwide, attracting real estate investors from Europe, Latin America, and Asia. The economic turbulence in Europe and the Global Financial Crisis have incentivized international real estate investors to resort to invest in the American real estate market. In addition, the emergence of alternative real estate investing strategies, such as REITs, has made the United States even more attractive. If you are looking for more yields and less debt, we recommend that you invest in American real estate today.
For more information on the US housing market and real estate market predictions, visit Mashvisor today!