Following the global financial crash of the late noughties – caused by the implosion of America’s sub-prime mortgage market – property values across the USA tumbled to levels that had not been seen for many years. Since the turn of the decade, however, as the country’s economy has steadily recovered from the darkest days of the credit crunch, property prices throughout the country has started to climb consistently.
The national average property price was still found to be 13.4 per cent lower now that what it was at the CoreLogic HPI’s peak in April 2006. That said, 27 states, as well as the District of Columbia, are not at, or within, 10 per cent of their peak prices. According to separate data provided by the National Association of Realtors, as of January 2015 the average price of a property in the United States was $208,500 – it had been over $219,000 at the start of 2007.
While the rising prices and improving economy has managed to attract buyers back into the market, some moderating influences, such as rising mortgage rates, are expected to lead to a slowdown in home value appreciation throughout 2015. The positive side to this is that tightened lending should contribute to a more balanced market, and help to avoid a bubble such as the one that sparked the previous economic meltdown eight years ago.
The US lending market has changed significantly over recent years and although financing the purchase of a property there is not as easy as it used to be, it’s certainly not impossible, especially if you have a healthy deposit to put down. Mortgages are generally available for purchases up to 70 per cent of the property’s value, depending on the state in which the property is located. Most mortgages are agreed on a repayment basis, the maximum term is 30 years, and interest rates and load terms tend to vary depending on the property type and exact location.
The minimum loan size also varies by State. For example, in Florida, the country’s second most popular destination for British immigrants behind California, the minimum loan is $85,000, while in Alabama, California, Colorado, New Mexico, New York and Texas is $150,000, The minimum loan for other states is $500,000. Rates currently start from just 3.25 per cent for a five-year fixed deal and 6.25 per cent for a long-term (15 or 30-year) fixed deal. Many of these mortgages have no early redemption penalties so lump sums may be paid off the balance at any time without incurring a penalty.
Buying a property
When it comes to buying a property, it’s important to note that the purchasing process will almost certainly differ depending on the state in which you are intending to buy a home. For example, most states in the USA require that the Agent you use to help you buy or sell real estate (should you wish to use one; there is no requirement) holds a Real Estate License, but this is not true in every state. Perhaps the biggest difference between buying a home in the US compared to the UK is that, generally, once a buyer’s offer to purchase a property is accepted, the contract and timing is fixed and binding.
The closing date of the sale is defined and agreed right from the start of the process, and the buyer is fully committed to completing the purchase by paying an ‘earnest money’ deposit as part of the contract agreement. This amount is likely to be around 1 to 3 per cent of the final purchase price, and the money will be kept by the sellers if the purchaser is unable to complete the sale contract on time.
Renting a property
Should you wish to rent instead of buy your property, then you’ll also need to be wary of some minor state-by-state differences to the process. In most cases, you should expect to fill out a comprehensive rental application, pay an application fee, and I have your credit checked. Once approved, you’ll probably need to pay a security deposit and part with a month’s rent up front. Most property managers require a one-year lease, although this is obviously down to the landlord’s discretion. Apartment communities that offer corporate housing often offer short-term rents for as little as one month, but you should expect rental rates to be much higher. Due to an increase in the number of people renting property in America – a consequence of the economic crisis which left many Americans unable to afford to buy their own property – rental costs have risen sharply in recent years. According to January 2015 figures from real estate firm Zillow, rental prices across the United States have increased by 52 per cent since 2000.
What you can expect to pay each month varies widely, depending on the type of property you are after and, of course, it;s location. For example, San Francisco, California, is home to some of the most expensive rental properties in the US. There one-bedroom is likely to set you back around $3,410 a month – $400 more than even the a New York average. In Austin, Texas however, a similar property is likely to be closer to $1,000 a month.
While it is nigh-on impossible to provide a clear picture of what a typical ‘American’ property looks like, given that the country encompasses so many different climates and landscapes, one thing you can be pretty confident about is that it will be much bigger than the property you have been used to living in in the UK. The average size of an American house offers over living 200m living space; more than double that of the typical British property.
Given that the majority of Brits heading for a new life across the Pond tend to settle in one of the country’s warmers States – California and Florida are by far the most popular, while Texas is also popular – it’s fairly likely that your property will have a fairly large outdoor space in which to enjoy all the extra sun that you’ll be benefiting from, will have a fairly large outdoor space in which to enjoy all the extra sun that you’ll be benefiting from, while outdoor swimming pools are also far from an uncommon feature.