The property market is improving in the US yet international buyers – including a large number of Australians - must be wary of "spruikers" offering poor deals, a senior executive with RE/MAX WA has said.
“A significant percentage of sales in the US continue to be bank owned or ‘short-sale’ properties whereby the bank has repossessed the property or where the owner has been permitted to sell the property ‘short’ of the actual debt to the bank without recourse,” said Geoff Baldwin, managing director of RE/MAX WA, not long after his return from the RE/MAX International Conference in Las Vegas.
“The good news is that these properties are now selling readily, and investor activity is currently very strong in many states, demonstrating a new confidence in the market and underlining the belief that prices have bottomed out.”
Mr Baldwin said feedback from the scores of RE/MAX regional directors, including those from Europe, was for the most part far more positive than at their last meeting twelve months ago and in some cases vastly improved. “The RE/MAX International Convention is attended by 5,000 plus RE/MAX agents from around 85 countries, including all US states and Canada, so it provides a very reliable sounding board,” he said.
His comments come not long after the US-based National Association of Realtors reported an improvement in pending home sales.
The Pending Home Sales Index, which the NAR said is a forward-looking indicator based on contract signings, rose two per cent to 97.0 in January from a downwardly revised 95.1 in December, and is eight per cent higher than January 2011 when it was 89.8. The data reflects contracts but not closings.
The January index is the highest since April 2010 when it reached 111.3 as buyers were rushing to take advantage of the home buyer tax credit.
Lawrence Yun, NAR chief economist, said this is a hopeful indicator going into the spring home-buying season.
“Given more favorable [sic] housing market conditions, the trend in contract activity implies we are on track for a more meaningful sales gain this year. With a sustained downtrend in unsold inventory, this would bring about a broad price stabilization or even modest national price growth, of course with local variations.”
Mr Baldwin added that, in some US states, around one in five sales are being transacted with foreign purchasers, including Australian buyers.
“In the past 12 months around $88 billion worth of US property has been sold to non US buyers including Australians.”
Mr Baldwin urged Australians to steer clear of "spruikers" promising US property 'bargains'.
“Unfortunately the US market, although it does offer some amazing opportunities, can also be a minefield for the novice investor so people should avoid spruikers and deal with long established companies if considering a US investment,” he said.
“As the US market continues to improve so too will our local market reflecting in a steady strengthening throughout 2012.”