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Where to invest today: a journey into the American turbo-recovery.

28. April, 2021


Large migrations, employment growth, increased credit liquidity, new demand for real estate and the usual shortage of inventory.

A little more than three months after the start of the presidential term, there will be 200 million doses of the vaccine that Americans will receive by May. Also for this reason, the month of March closes for the USA with some significant numbers from the point of view of economic recovery, as well as a new infrastructure plan worth 2,000 billion dollars.

In the last article of our blog we analyzed in points the US maneuver in terms of vaccinations and aid to the average citizen. The conclusion is that what is happening in recent months is a real socio-economic situation, which opens an interesting time window for those who are considering where to invest today. When it comes to investments, the time factor is essential and the good investor must seize the right moment, especially when conditions allow to optimize profitability. We at OPISAS are used to carefully analyze economic trends and the impact they have on the residential real estate market, providing our investors with the correct parameters to optimize the gains deriving from a real estate investment overseas.

When you have capital and must choose where to invest today, it is in fact fundamental to understand where the real gain comes from, especially with a view to avoiding risks and implementing safe real estate investments. In the case of real estate investments, the investor's earnings are mainly linked to two components: the rental income (the rent paid by the tenant settled in the property) and the increase in the value of the property over time. With regard to the latter parameter, it should be noted that in March 2021 the average price of properties available for sale saw an increase of 15.6% compared to last year. The difference between the price at which the property is resold and the price at which the property was purchased generates the capital gain, a parameter to be taken into firm consideration when evaluating where to invest.

From the outset, it is therefore clear that safe real estate investments that create profit through rental income are linked as much to market trends as to economic policies, especially when these data have a direct impact on spending capacity and standard of living of the average citizen living on rental basis.


Political actions taken by the USA:

The policies implemented by the US in recent months have a direct influence on both of these components and provide those who are considering where to invest today numerous new ideas. With the aim of anticipating and accelerating the post-Covid recovery as much as possible, the new Presidency is following two main guidelines: one immediate with the American Rescue Plan, the other long-term with the new American Jobs Plan of 2,000 billion dollars focused on infrastructure and work.


Let's analyze the two maneuvers below to understand their impact on the life of the average American:

American Rescue Plan: The $ 1,900 billion plan for Covid19, in addition to putting the turbo on vaccinations, was half directed into the pockets of citizens, through a check or bank transfer of 1,400 dollars for nearly 88 million Americans. Added to this there is a refinancing of unemployment benefits: $ 400 a week for unemployed individuals.

American Jobs Plan: On March 31, while visiting Pittsburgh, Pennsylvania, Biden presented his new infrastructure plan worth over $ 2 trillion, describing it as "the largest investment plan in the American workforce since World War II".



But what is happening in everyday life and in the residential real estate market in recent months?


With a highly digitized system, widespread dose distribution and a large number of ampoules available, the United States opens the month of April with encouraging signs. What you can breathe in these days in the US is a real confidence in the return to the normal life. The United States is carrying out a vaccination campaign that meets the citizen and reaches him as much as possible, not only through the technological tools made available to the individual and the vaccination centers located in strategic points of the cities, but also through the use of mobile units located in different areas of the country. At present, with the vaccine that will also be administered to young age groups, the return to normality in a reasonable time seems to be already in place.

Unemployment at its lowest

The speed of the vaccination plan, together with the general reopening in large areas of the country and the economy, have already shown their first effects, generating over 916,000 new jobs and lowering the unemployment rate to 6%. This is the lowest level since the start of the pandemic. Those who are in the process of evaluating where to invest today and are interested in safe real estate investments in the United States must therefore take into account the impact of these data on the residential market.

For example, an increase in hiring in the tourism sector should be noted: we are talking about 280,000 new jobs, a figure that strengthens the opinion of the many investors who, while wondering where to invest today, are focusing on the rebound of the tourism sector. One of the cities that could benefit from this rebound is Orlando, known for its tourist attraction and numerous amusement theme parks and where it is already difficult to find a seating place in a restaurant without having a reservation or a free car to rent. Small everyday experiences that give the idea of an economy already in full swing.


An all-time low Inventory

In evaluating where to invest today, and if the choice falls on real estate, a noteworthy fact concerns the conditions of the US residential market for several years. The now historic imbalance between supply and demand for properties has now reached historic lows.

According to the latest data collected by the National Association of Realtors® (NAR), the spring 2021 residential market opened with an extremely low number of properties available (the lowest in the last 40 years). A report prepared by Black Knight Inc indicates the presence of 40% fewer properties than last year. At this point we no longer speak of "low inventory", but even of "dry inventory", to underline a situation of significant shortage of properties. The data reported by the Federal Reserve (FRED) updated to February 2021, shows just over 1 million units already built available across the United States. There are some markets that, according to NAR®, are registering, more than others, particularly significant numbers: among the areas in which the demand for real estate is significantly higher than the supply, there are Jacksonville, FL, Fayetteville, NC.

These data lead to two immediate considerations: on the one hand, with such high demand, available properties are seeing a notable appreciation (house prices have increased by 3.12% in the last quarter alone and by 15.6% compared to last year); on the other hand, such pressure on supply also indirectly supports the demand for rental properties. They are coordinates that for those who are considering where to invest today suggest interesting capital gain opportunities as well as stable and continuous rental income over time.

New buildings are not keeping up

To contribute to the saturation of demand, it is also worth mentioning the construction of new housing realities that is proceeding more slowly. During 2020, capital earmarked for the construction of new buildings, both commercial and residential, peaked at $ 618.7 billion in February 2020, falling to $ 415.62 in April 2020 due to the pandemic. This figure has not yet fully recovered, but the residential sector is starting to show signs of recovery.


What are the latest trends in the lifestyle of the average American?

Finally, let's see what are the latest trends related to the lifestyle of the average American, useful for far-reaching considerations when evaluating where to invest today. According to the portal, what we are witnessing in this period is a "great migration": a recent survey by Zillow showed that more than 1 in 10 Americans reported having moved in the last 12 months, by choice. or by circumstance. This is not the first migration by American citizens: the history of the USA has always been characterized by moving to areas where conditions were more favorable for family or work reasons. The big difference between the previous migrations and the current one lies in the speed, as well as certainly in the causes.


What are the reasons behind this migration?

It seems that individuals who are moving to the suburbs are considering both renting and buying properties. To contribute to this fact, it is certainly the presence of more competitive prices, commensurate with a less chaotic lifestyle and the presence of first-rate services at lower prices.

As we had already anticipated in one of our previous articles, working from home has created two immediate effects: on the one hand, the fact of living the house full time has increased the needs of individuals, now in search of larger spaces and well served in less chaotic areas; on the other hand, thanks to the possibility of being able to work with a simple internet connection, citizens were given the opportunity to actively choose the place to live without conditioning.

Among the individuals interviewed who moved their residence in the last six months, 75% said they did so in order to get closer to their family, or simply to live in a desired part of the country. Work from home became a national norm in pandemic management and allowed people to live where they wanted as long as they had a good internet connection.

Now more than ever, with the vaccine in circulation and the economy picking up strength, the Zillow researchers say there will be about 2.5 million new families entering the housing market in 2021. The so-called "second-tier cities" are therefore seeing an important influx of citizens who are looking for larger houses for a price that is certainly lower than what they would pay in a first-tier metropolitan area.

From the information analyzed above, it is possible to deduce that, in order to understand where to invest today, the second-tier areas could therefore give important satisfactions. We cannot yet accurately predict the implications of these moves, but the increase in residents in these areas of the United States will likely contribute to the emergence of new personal services and this could be followed by an increase in the value of real estate. By investing now in a property located in areas of this type, as for some of the proposals in our inventory, not only good rental income can be realized, but once the urban revival of these locations has taken place, the properties could be resold for a higher value than the purchase price, thus generating attractive capital gains.

A final figure that emerged in recent months also concerns the methods of completing the sale, with numerous buyers willing to buy with a much less pronounced use of financial leverage than in the past. This is an indicative element of the solidity of the current growth of the residential real estate sector. This increase in available liquidity could also find part of its origins in the closures of the past months, which have slowed down spending in various sectors and favored the provision of savings. Furthermore, it should be noted that the impossibility of meeting in person has made remote purchases and the use of technological equipment plausible and effective. In order to implement safe real estate investments, sellers and buyers had to rely on real estate professionals, who were the essential element to carry out the sales and give the right assistance in all phases of the investment.


To conclude …

The news coming from the United States in recent months require the correct interpretation, in order to make correct choices and reduce the risk deriving from an information gap. In order to make safe real estate investments overseas, it is therefore good to rely on an expert in the international real estate market. In this way, it will be possible to optimize income and capital gains and make the most of your capital.

Fix your consultation with us now to obtain information on real estate investments overseas and optimize your investment choices.



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