U.K. Alert – Top 5 Q&A Regarding U.S. Real Estate

Buy House In USA

Did you know? Non-U.S. resident investors purchased $59 billion worth of home purchases in the past year, a 9% leap from 2021, according to a report from the National Association of Realtors. 

We asked 387 of our U.K.-based readers their top 5 questions regarding purchasing an investment property in the U.S. 

Below, we answer those questions.

1. Can U.K. citizens buy property in the United States?

Yes, U.K. citizens can purchase property in the United States. It’s very straightforward. U.K. citizens can qualify for a mortgage in the U.S. with America Mortgage’s F.N. Investor + loan program. Borrowers can get pre-approved for a loan within 24 hours of application! What makes the U.S. unique from many other countries, the U.S. does not have any laws which prohibit or limit the ownership of U.S. real estate. 

2. What documents are required for British citizens to apply for a U.S. mortgage?

The loan document requirements are based on the loan program the client qualifies for. America Mortgages’ approval rate is 97%, so we can almost certainly find a solution for our clients. Below are a sample of two of our most popular loan programs for non-resident U.S. real estate investors;

America Mortgages Investor + 

  • Income letter by either the borrower’s employer or if self-employed, accountant (purchase, equity release, cash-out, or refinance).
  • Credit report from client’s home country (must be translated to English). U.K. credit report is perfect; however, if the client has credit in another country, that will also be okay. 
  • Two months’ bank statements (foreign bank accounts allowed).
  • Passport. 

America Mortgages Investor

  • Qualify ONLY on the rental income of the property (purchase, equity release, cash-out, or refinance).
  • Credit report from client’s home country (must be translated to English). U.K. credit report is perfect; however, if the client has credit in another country, that will also be okay. 
  • Two months’ bank statements. 
  • Passport.

3. Where do U.K. Citizens buy property in the U.S., and what do they use it for?

U.K. citizen property ownership in the U.S. is evenly split between suburban/resort areas (45%) and rural/urban areas (55%). Top states include:

U.K. citizens use their U.S. properties as investments, second homes, and Airbnb:

4. What is the average purchase price of houses in the U.S. purchased by U.K. citizens?

The average purchase price of houses in the U.S. purchased by U.K. citizens is $718,800, and the median purchase price is $366,600. With a total of 2.7 billion U.S. dollars annually, the United Kingdom was one of the top foreign buyers of residential real estate in the U.S. in 2021.

5. Do U.K. citizens pay the same mortgage rates as U.S. citizens?

Non-U.S. citizens may face slightly higher mortgage rates with a minimum down payment of 25%. What makes the U.S. unique from many countries is there are no age limitations on a mortgage. This means a borrower, 19 or 99, gets to take advantage of the same long 30-year tenure (fixed or adjustable). 

Overall, with America Mortgages’ Foreign National loan programs, clients do not need U.S. credit to apply for a U.S. mortgage for foreign investors. We accept international credit reports from your home country or country of residence. 

As a company, America Mortgages’ only focus is providing market rate mortgage financing for foreign nationals and U.S. Expats. 100% of our clients are living and earning their living outside of the U.S. We have loan officers in 12 different countries speaking your language, in your time zone. If you’d like to learn more about our loan programs, please email us at [email protected].

www.americamortgages.com

“Ex-post, Ex-ante” + Family Office uses bridge loan to buy Retail/Office building

Bridge Loan
Ex-post, Ex-ante" + Family Office uses bridge loan to buy Retail/Office building

Ex-post

The worsening energy crisis in Europe has taken the front page of most media channels this week as the Nord Stream 2 pipeline, a 1,200 km natural gas pipeline from Russia to Germany, remains close, which is driving the Euro to a 20-year low vs. USD. The BBC reports that the annual energy bill for a typical UK household is £1,971. From 1 October, however, that’s due to rise 80% – to £3,549!!! Can you imagine paying USD4,000 a month for electricity?! The new incoming PM, Ms. Truss, will certainly be making this a top priority. We really hope for a mild winter in Europe for everyone’s interest. 

Meanwhile, the Yen is now close to a mind-boggling ¥145 vs. USD, a 24-year low! Oil at $82 is a very critical level and, technically speaking, could break lower, which could give some breathing room to the economy. Seeing Oil go from $120 a barrel in May 2022 to $85 now shows how volatile the world is and also how quickly demand can fall for the most popular commodities. 

Oil Edges Higher After Deep Selloff Graph

In the US, Nonfarm payrolls were +315,000 in August (seasonally slow) vs. +526,000 in September, slightly lower than expected but a big month-on-month decline. Meanwhile, unemployment is at +3.7%, slightly higher than expected. The tight labour market while companies are announcing hiring freezes is peculiar. Could this be a recession where employment is less affected? ISM Manufacturing for August was 52.8, unchanged from July – not the decline I was hoping for to give us a little breathing room. 

US Rates30-year fixed 6.12%15-year fixed 5.32%
30-year jumbo 5.10%5/1 ARM 5.95%
* Reference only. These rates are Conforming rates, not applicable to Foreign Nationals. 

Ex-ante

I’m really keeping an eye on oil prices…I have a sinking feeling that Oil is such a consensus overweight for most hedge funds (and institutions) that technical breakthrough support (say $80) will see a further decline in oil prices which is good news for everyone! European energy prices are now generally 15-20% of GDP, and someone has to pay for it – the public or private sector. If the public pays for it, it will have to run a fiscal deficit of 15-20% of GDP, so more debt on top of the already growing debt problem. The private sector gets tricky, especially for countries that have piled on loads of debt in a short period of time. One country that sticks out is Sweden, with over 150% of private debt to GDP. Nationally, Sweden’s debt service ratio is 27% (highest on record). It appears Sweden, France, and South Korea are the most interest-rate sensitive countries, relatively speaking, according to BIS data. Watch this space. The negative soundbites on the European banking sector are going to get louder and more frequent.  

Buy now! Why now? 

We are in a perverse cycle where rising rates are actually squeezing up rental yields. The marginal buyer cannot afford to own given rate rises, and the Millennials also cannot afford and must rent – AND, to add to that, there is a 3.8M housing shortage according to the Fed. If you read last week’s “Ex-post, Ex-ante,” places like New York are seeing double-digit percentage increases in rents, BUT 39% of residents are looking to move given the high cost of living. It won’t be long where we are in a world where rates are 7-8%, BUT rental yields could be 15-20% (some parts of Texas can net you low teens yield already).

Look at this chart below from a Bloomberg article (7 September) US household debt service ratio has fallen from around 13% at the time of the last housing crisis to 10% now, according to the Fed. The amount households are spending to service their mortgage debt has been cut almost in half, from 7.18% in 2007 to a recent 3.89%! 

Household Debt Service Ratio

LOANS OF THE WEEK!

1. Indonesia family uses bridge loan to purchase $5.4M Retail/Office to maximize cash flow

Location: San DiegoPrice: $5,400,000
Property: Storefront Retail + OfficeLoan Amount: $3,500,000
Cap rate: 4.05% / 100% leasedLoan to value: 65%
Use: InvestmentRate: 8.5%
Loan: AM USA Bridge+Term: 3-year interest only

– Client was offered a bank loan at 5.75% but given that it is cash-flow based he would not be able to cover the 1.25x cash flow coverage typically required and would be able to get around 40% LTV. Our knowledge was valuable. We knew that California is a tough market as it is with very low CAP rates but the added increase in interest rates is making it even harder to achieve higher loan amounts.

– Our solution: Use a bridge loan with higher leverage, interest-only payment to get into the property. Then position the tenants for renewal of their lease agreements and refinance when rates come back, allowing for more leverage to be supported by the cash flow. Good news is the client is using this strategy to purchase more yielding assets in the US. Loan managed by our Head of Sales, [email protected]

2. Canada tech entrepreneur buys $1.25M condo in Miami

Location: MiamiPrice: $1,250,000
Property: CondoLoan Amount: $875,000
Use: InvestmentLoan to value: 70%
Loan: AM Foreign National+Rate: 6.875%
Term: 30-year fixed

– Client wanted to start building rental portfolio in the US to earn income and to begin developing a credit footprint for future family and business opportunities. Given the nature of his business, he was not able to find bank financing in Canada and we were able to find a mortgage which used his Canada credit and income to qualify.  Funded in 43 days with the help of our Canada-based loan officer, [email protected]

3. UK family buys $850K Boston condo in son’s name to develop credit

Location: BostonPrice: $850,000
Property: CondoLoan Amount: $595,000
Use: InvestmentLoan to value: 70%
Loan: AM Foreign National+Rate: 6.875%
Term: 30-year fixed

– Client bought condo in son’s name to rent out while his son attends boarding school on the East Coast.  The intention is for him to stay in the condo upon graduation from university in 4-5 years or continue to rent out to bolster his income while starting out on his career, meanwhile developing US credit for himself.  Our UK-based loan officer provided a hassle-free experience throughout their mortgage journey, [email protected]

Schedule a call with us at [email protected] to find out more! 

www.americamortgages.com

Ex-post, Ex-ante + Which States are Equity-rich?

U.S. Home Prices - America Mortgage

Ex-post

Biden cancels $10,000 in student debt – timing before the mid-term elections are interesting, but no one can deny that it is a big problem that is stifling growth in many ways. The main event was Federal Reserve chairman Powell’s speech at Jackson Hole, which was a reminder that inflation is being treated more seriously than we are expecting. Risk assets have been correcting ever since – yet bonds haven’t moved with the same intent indicating smart money had priced in the Fed’s response. While 10Y treasuries do not dictate mortgage rates, they 2 are correlated, and we expect some upward pressure on rates. 

Ex-ante

Over the next week, we will be paying attention to the Case-Schiller index as a gauge year-on-year home prices, and the big one is August ISM manufacturing index, which consensus has at 51.8 (under 50 is a contraction). If this is lower than consensus, it may portend to be something more recessionary. As we highlighted in last week’s “Ex-ante, Ex-post,” there is historically a big contraction in manufacturing output when rates rise to a certain extent.

U.S. HOME PRICES

We reiterate the underlying fundamentals of housing are very supportive, with an abundant amount of equity and well-known shortage. 

In an article written by the Fed, on 7 May 2021, “Housing Supply: A Growing Deficit”, The claim in 2018, the housing shortage was 2.5 million units, and now, more recently, in 2020, the U.S. has a housing shortage of 3.8 million units. 

That is to say, 3.8 million units are needed to not only meet the demand from the growing number of households but also to maintain a target vacancy rate of 13%. Between 2018 and 2020, the housing stock deficit increased by approximately 52% 

Elsewhere, In Bloomberg’s article published, 5 August 2022, “Almost Half of Mortgaged Homes in U.S. Now Considered Equity-Rich .”This would be the 9th straight quarterly rise, according to the article, fuelled by strong house valuations during the pandemic area. The article definition of Equity-Rich as owners having over 50% in home equity. Some of the highest equity-rich states are Florida, California, Washington, Utah, Idaho (surprising), and Vermont. 

Updated Target housing Stock
Equity Rich Graph

LOANS OF THE WEEK!

Singapore citizen purchases new development in Manhattan, New York

Location: New York CityPrice: $1,000,000
Property: CondominiumLoan Amount: $600,000
Use: InvestmentLoan-to-Value: 60%
Loan: AM Foreign National+Rate: 6.875%
Term: 30-year fixed

Singapore client attended a presentation by an international realtor on a New York condo launch. America Mortgages was attending the event and helped the client discuss the financing options available.

Philippines businessman purchases home in Florida

Location: Fort LauderdalePrice: $650,000
Property: Single Family HomeLoan Amount: $455,000
Use: InvestmentLoan-to-Value: 70%
Loan: AM Foreign National +Rate: 6.875%
Term: 30-year fixed

Referred by his local private bank, the client wanted to own a retirement home for the future (he’s only 58) but liked how rental rates have been rising in the area and also wanted more USD income.

Swedish National purchases home in Texas

Location: AustinPrice: $9,500,000
Property: Single Family HomeLoan Amount: $5,225,000
Use: InvestmentLoan-to-Value: 55%
Loan: AM HNW+ (Super Jumbo)Rate: 7.25%
Term: 5-year fixed, 30-year amortized

Swedish client saw our ad on LinkedIn and reached out to discuss the financing options for a Texas property. He was surprised at how easy it was to qualify and close for direct U.S. lending option.

Interested in releasing equity? America Mortgages has a 97% approval rate for both U.S. Citizens & Foreign Nationals. As a company our only focus is providing market rate U.S. mortgage financing for foreign nationals and U.S. expats.

Schedule a call with us at [email protected] today! 

www.americamortgages.com

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Foreign Mortgage Loan
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“Ex-post, Ex-ante” + When rates will fall

U.S. Home Prices will Fall

Welcome to our newly revamped weekly product, where we do a quick summary of salient news over the past week and what to expect the following week and beyond. It took a while to think of a catchy name for our weekly and we hope you like it. We also plan to include our house view of the major macro events and, of course, how it all relates to the global real estate markets, in particular the US.

Contents:

  • Ex-post; Ex-ante
  • Will rates decline? Yes, starting in March!
  • Why US home prices will not collapse
  • Buyer’s Guide to California
  • Loans of the week! 

Ex-post

Last week saw major headlines with UK printing a 10% inflation number and Europe continuing to see hefty price increases in energy costs, with Germany at €700 ($696) a megawatt-hour, up from under €50 in January. 

In the US, mortgage applications dipped slightly for the week ending August 12, 2022, down 2.3% week on week. Things are generally slower in all areas of the economy in August, and this is no different. 

30-year fixed rate 5.45% mortgages are down 50 bps from June 2020 highs of 5.98%

* This reference rate is for conforming Fannie Mae loans, not applicable for overseas borrowers.

Ex-ante

This week, all eyes will be on Jackson Hole, where Fed chair Jerome Powell will speak on the economic outlook at 10 am Washington time. We cannot see Powell becoming incrementally dovish at this stage, while there could be an outside chance of being less hawkish. As a firm, our house view is that given the fact that the “reputation and credibility as an institution” is under pressure, the Fed will risk over-tightening in this economic cycle – right or wrong. To us, tightening into a recession is extremely heavy-handed, but Powell certainly does not want to be remembered as Arthur Burns 2.0. 

The Trillion-dollar question is IF rates will be cut, and if so, how much?

If you look at the Eurodollar implied futures curve, you will see that the market is expecting rates to peak in March 2023 at 3.93% and then start to decline to 3.51% by December 2023, and drop to 3.03% a year later. That is to say; the market is expecting 90 bps of decline in Fed Funds by December 2024! The charts also imply that rates are expected to stay under 3% thereafter.  

3-month Eurodollar Futures Yield Curve

3-Month Eurodollar Futures Yield Curve
Credits: Barchart.com, GMG Macro Research

ISM Manufacturing Index – US 30-Year Mortgage, YoY%, 18-Month Lead Inverse”

One area of potential concern is US industrial production, which is at risk of significant contraction (below 50 on ISM Manufacturing Index is a contraction). If so, this could trigger deeper recession concerns. The next the Institute of Supply Management (ISM) report will be out September 1st. 

If you look at this chart, it appears that the ISM Manufacturing Index (black line) lags the inverse of the US average 30-year mortgage rates (red line) by about 18 months. If the US manufacturing economy pans out in this manner, the Fed may be forced to make deeper cuts and we could see a bigger decline in rates than the market is pricing in, giving another opportunity for US home buyers who are waiting for lower rates! 

Mortgage Rates Graph
Credits: TradingView, GMG Macro Research

Home Prices

There is no impending collapse. We see strength in housing prices.

As we read in the media that home prices are softening, housing starts declining, home prices are falling, and it paints a doom and gloom picture, but we cannot see a collapse in housing prices and a repeat of 2008.  

Did you know that 40% of all homes in the US are held free and clear without a mortgage?

The average outstanding mortgage is 33% of home values. There is simply too much equity in the market for a collapse. Since 2008 underwriting standards have been significantly more stringent with more regulatory oversight. More importantly, most of the outstanding mortgages were printed when rates were below 4%!

Sure, in some cities, there will be softening as residents gentrify out to lower cost of living areas. It’s no surprise that San Francisco, Los Angeles, and New York City are at the tops of those cities where there are significant outflows of residents.  

According to a Redfin article on July 18, 2022, here are the:

Top outflow cities in 2Q2022:

San Francisco48,718Top destination: Sacramento
Los Angeles  40,632Top destination: San Diego
New York City 48,731 Top destination: Philadelphia

Top inflow cities in 2Q2022:

Miami12,614Top origin city: New York City
Tampa7,939Top origin city: Orlando
Phoenix11,464Top origin city: Los Angeles

Buyer’s Guide to California

Over the past 2 weeks, we have published a Deep Dive into what drives overseas buyers to California. In Part 1 – Education. We look at the top 50 public and private high schools in the state, average SAT/ACT scores, Median Income and Average Home prices and conclude the cities with the top schools tend to have the strongest property price appreciation and rental reversions.

In last week’s Part 2 – Demographics. We look at the Asian population in each of these schools and conclude the schools with the highest Asian population is another driver of home prices where the top schools are located.

This week, in Part 3 – Taxes and Benefits. We will conclude the report with a tax guide for overseas investors, how rental income is taxed and various deductions that are allowed.  

Finally, to wrap-up our Buyer’s Guide to California, we will be hosting a webinar with Susan Kim, our Private Client US Concierge Partner and top real estate experts in San Francisco, Palo Alto, Los Angeles, and Orange County to give you an on-the-ground discussion on the respective cities, where the value is now and in the future. Stay tuned!

Loans of the week!

1. Switzerland Family Office purchases luxury condo in New York

Client wanted options outside of their private bank which did not require pledging assets.

Type: Luxury Condo

Price: $20M

Loan Amount: $11M (55% LTV)

Use: Second home

Loan type: America Mortgage HNW+

Qualification: Using borrower’s liquid investment portfolio as a reference without encumbrances. (Example Fidelity account)

Term: 5-year fixed / 30-year amortized

Interest-only: Fixed for 5 years

Rate: 7.875%

2. UK technology entrepreneur purchases home in Atherton (near Palo Alto)

UK-national client attended Stanford and plans to move their children there in 3 years to attend high school. His goal was to rent out the home to tech executives or AirBNB in the interim.

Type: Single-family home

Price: $10.9M

Loan Amount: $6M (55% LTV)

Use: Investment

Loan type: America Mortgage HNW+

Qualification: Using borrower’s liquid investment portfolio as a reference without encumbrances. (Example Fidelity account)

Term: 5-year fixed / 30-year amortized

Interest-only: Fixed for 5 years

Rate: 7.25%

3. Singaporean family purchases home in San Antonio for rental income

Father attended the University of Texas and, after reading our Deep Dive report, decided to own a home where he could take advantage of the strong USD and rental income currently in San Antonio and potentially will move there for retirement.

Type: Single-family home

Price: $350,000

Loan Amount: $245,000 (70% LTV)

Use: Investment

Loan type: America Mortgage Foreign National+

Qualification: Based on overseas income and credit

Term: 30-year fixed

Rate: 6.875%

Thank you and feel free to contact us if you have any questions.

www.americamortgages.com

Buyers Guide to California Pt 2 – Demographics

Buyers Guide to California
Buyers Guide to California Pt 2 - Demographics Matter

CALIFORNIA

Californication, Red Hot Chili Peppers

In last week’s “Buyer’s Guide to California Pt 1 – Education Matters,,” we discussed why Education is an important driver of where overseas borrowers choose to invest in real estate. 

In that report, we looked at the top 50 Public, and Private high schools, average ACT/SAT scores, Median Household Income, Average Home Prices, and Rental Yield.

We argued that when looking at where to make your U.S. property investment, the quality of education in the nearby city/area is a factor in the decision since there is always a notion of “can I live there one day” and “maybe my children can go to school there“. Popular cities in the U.S. will undoubtedly have good schools in the city or in the vicinity. 

“Popularity as a living destination” in turn drives demand, home value appreciation, and strong growth in rental income.

This week we focus on Demographics.

An under-appreciated factor in determining where to own is what city has the most culturally similar population. It’s much easier when you have neighbors that speak your language and share similar cultures and values. 

We will answer these questions (and much more)!

  • Which high schools in California has the highest Asian population?
  • Which cities have the most Korean-born residents?
  • Which cities have the highest total Asian population and the respective top schools?
  • Does the highest Asian population determine how home prices will behave?
  • Which California cities have the highest: Hong Kong, China, Taiwan, India, South Korea, and Philippines-BORN residents?

Demographics matter!

In this study, we solely focus on the Asian population in schools. Asians have been the biggest group of immigrants over the last 60++ years, spurred mainly by the Immigration Act of 1965 but also the Taiwan Relations Act of 1979, the Luce-Celler Act of 1946 as well other obvious political issues of the time.

In addition to the above reasons, many immigrants just wanted a better life for their families, they studied hard, and slowly communities grew around the top education destinations.

Here is the Asian population (>40%) for the top 50 Public and Private Schools in California.

You can also see that these cities have the highest Home Price to Median Income ratios, highlighting the center of attraction for Asians moving to the U.S.

Note a common rule for affordability is for a home price to be UNDER 3x your income!

Public High Schools

Public High Schools - Demographics

Private High Schools

Private High Schools - Demographics

Takeaway – You can see cities where the top schools are located have very high Home Price to Income Ratios which highlights the property value growth driven by families moving to these cities, in particular Asians.

The next study is very interesting!

Our team looks at which California cities have the highest overseas-born residents, specifically from:  China, Hong Kong, Taiwan, South Korea, Philippines, Vietnam, and India.

You guessed it, many are in the cities where the top schools are

Top Cities Taiwan & China Born Population
Top Cities Hong-Kong & Phillippines Born Population
Top Cities India & Korea Born Population
Top Cities VietnamesePopulation

We only used cities with over 20,000 population.

*Refer to full chart below

Here is same chart in Alphabetical Order

Illustrating popular cities ranked by multiple demographics

Popular Cities Ranked by Multiple Demographics

Cities in California For Asians
Average Price to Income Ratio

As you may observe in this report, the cities with the highest Asian immigrant population tend to be where the most demand is, especially when compared to household income, and it’s no surprise it’s also where the top high schools are.

That is to say, the schools and cities mentioned in last week’s report on Education being the main driver of price appreciation and rents are very similar to the cities mentioned in this report.

While this study is not meant to be a rigorous analysis by any means, it is close to my heart since I moved from Singapore to San Francisco when I was 16. My parents had the same thought process…strong Hong Kong population and good schools. I ended up finishing high school in San Francisco and attended UCLA.

Stay tuned for the final part of our Buyer’s Guide to California, where we take a quick look at the general carrying costs for a rental property, including taxes, deductions and other administrative costs. 

Finally, we will be hosting a webinar with our California Partner for a real “on-the-ground” discussion along with a panel of real estate experts for the Bay Area, Palo Alto, Los Angeles, and Orange County. We are still finalising the exact details, but this will be in September. 

Have a good weekend!  If you want a copy of the spreadsheet with the data from our research, please contact us. We are happy to share our findings.

www.americamortgages.com

They’re Back! Overseas Buyers of US Real Estate

Overseas Buyers of US Real Estate
They’re Back! Overseas Buyers of US Real Estate

Overseas Buyers of US Real Estate

The past several years have been volatile for all areas of the U.S. economy, but especially the real estate market, which as seen price appreciation from a low-interest rate environment. Anyone who has tried to purchase a new home in the U.S. during this time has learned what it means to be a buyer in a seller’s market, but it wasn’t as bad as it could have been.

As a result of pandemic-related travel restrictions, the true scope of potential foreign buyers into U.S. real estate was not felt. That meant less competition from wealthy, overseas cash buyers. 

However, that’s beginning to change as overseas buyers of US real estate return.

According to a report by the National Association of Realtors (NAR), Non-U.S. citizens comprised $59 billion worth of home purchases in the United States from March 2021 to March 2022, a 9% increase from the previous year and the first increase in three years. 44% of these foreign buyers paid cash and the average price of homes purchased has increased by 18%, nearing $600,000.

All of this comes in the wake of a real estate environment characterized by low mortgage rates that created bidding wars, housing shortages, and price surges across the country. However, the madness may wane as interest rates rise, and an uncertain economy could sideline many potential domestic buyers.

This is good news for foreign buyers making all-cash offers because they are effectively immune from interest rate changes. As pandemic-related travel opens up, more and more foreign buyers can enter the U.S. real estate market.

Who is a foreign buyer? or overseas buyers of US real estate?

According to the NAR, a “foreign buyer” is a non-US citizen with a permanent address in another country. Moreover, 57% of these foreign buyers are non-U.S. citizens and recent immigrants who have been living stateside for less than two years or non-immigrant visa holders who have resided in the U.S. for at least six months. 

Where do most foreign buyers come from?

From March 2021 to March 2022, foreign buyers living abroad spent $24.9 billion on purchasing homes in the United States, an increase of 13.2%.

Canadians have the highest share of existing home sales at 11%, followed by Mexicans (8%), Chinese (6%), Indians (5%), Brazilians (3%), and Colombians (3%).

While Chinese buyers purchased fewer homes than Canadians, the dollar value of their purchases was substantially higher, with $5.5 billion coming from Canada vs $6.1 billion from China.

Which states are they going to?

For the 14th year running, the leading location for foreign buyers was Florida, with 45% of international purchases occurring in the Sunshine State. After Florida were California (11%), Texas (8%), Arizona (7%), New York (4%), and North Carolina (4%).

As domestic buyers are on hold due to an unpredictable economy and rising interest rates, the opportunity for foreign buyers to capture great deals will also increase. If you’re considering purchasing a house in the U.S., you may want to get in early before the rest of the world scrambles to get in on the action.

Whether you want to buy/rent a residential home or invest in U.S. real estate, it is in your best interest to connect with real estate experts committed to seeing your housing dreams come true.

At America Mortgages, we leveraged decades of experience in mortgage lending to match you with our pool of lenders. Our only focus is providing market rate U.S. mortgage financing for foreign nationals and U.S. expats. No one does it better!

Contact us today at [email protected] to find your dream home or learn why you should invest in U.S. real estate market now.

Buyers Guide to California – Education drives prices and rents

Education Drives Prices and Rents

CALIFORNIA

“California, Here we come” Phantom Planet

(click for an awesome Indie rock song from 2002)

We are super excited to kick off our “Buyer’s Guide to U.S. Real Estate” series, where we go in-depth into the main U.S. states for property investment purchases, starting with California!

We also have a surprise guest at the end of the month (see bottom of article)!

What’s not to love about the Bohemian vibes of San Francisco, the technology center-of-the-universe in Palo Alto, wineries in Napa, food in Yountville, golf in Steinbeck country, the quaint and exclusive Montecito, and year around perfect weather in San Diego.  

And finally, Los Angeles – Beverly Hills, Hollywood, Venice Beach, Santa Monica, Bel Air, Pasadena, Orange County – it’s almost endless. 

It’s no surprise that California is a favourite investment destination for our clients, both Overseas Expats and Foreign Nationals, primarily from: the U.K., Canada, Australia, Mexico, China, Hong Kong, Singapore, Philippines, Indonesia, Australia, France, UAE, Germany to name a few.

Want Home Value Appreciation and Rental Income Growth?

Education is key!

Job market growth is certainly a key driver for price appreciation and is normally driven by the new business formation in the area, but popularity as a living destination is driven by things like safety, cost of living, ease of transportation and quality of education, especially for families with young children.   

“Popularity as a living destination” in turn drives demand, home value appreciation, and strong growth in rental income. 

Why is Education important?

In this week’s report, we will take a deep dive into Education – an important (if not the most important) factor for overseas property investors in determining where your next home purchase will be in the U.S.

With Foreign National buyers, in particular, the objective of owning real estate to earn income almost always comes down to “could I live there one day”?   

In Asia, where owning property is ingrained in their culture, it’s common to purchase an investment property “in anticipation” of sending their child to college. They could even live there during or after they graduate, and the price appreciation could even pay for college if they sell the property. Or, if the child decides to get a job in the U.S., they can stay in the apartment as a post-graduation gift to build up their credit or even rent it out to earn income. 

Which are the top high schools in California?

We look at the top 50 high schools in California, both public and private, ranked by average SAT and ACT scores. As you can see, the SAT scores will range from 1300-1500. To get into a top 25 U.S. university, the SAT scores should be at least 1400 as a reference, so these schools are all great.

Why high schools?

Many new immigrants or returning expats will choose to live in areas where there are good schools and a higher population of similar background families (the latter we will investigate next week). High schools are a very important decision since it will determine their experience during these formative years between 14-18 years old but also potential college choices. 

“Popularity as a living destination” drives demand, home value appreciation, and strong growth in rental income. 

Schools with the highest SAT/ACT scores

– Public: Lynbrook High School, San Jose

– Avg SAT 1450 / ACT 33

– Private: The Nueva School in Hillsborough & Basis Independent in San Jose

– Avg SAT 1510 / ACT 34 for both

Household Income, Home Prices, and Rental Yield

We also look at the Median Household Income, Average Home Prices, and Rental yield in each city. When moving to a new city, aside from the quality of education, most will look at how expensive it will be to live there, own a home, and potential rental income potential. 

It’s probably no surprise cities like Palo Alto, San Diego, San Jose, Los Angeles, and others will have higher home prices, but we also look at a rough gauge of affordability which is a “Home Price to Income Ratio,” which tends to be where most immigrant buyers choose as their base.

Cities with the highest Median Income

– $250,000+ per annum income

– Cities: Piedmont, Hillsborough, Los Altos

– Neighbouring schools: Piedmont High School, Los Altos High

Cities with the highest Home Prices

– $2,000,000+ home price

– Cities: Piedmont, Palo Alto, Hillsborough, Ross, Atherton, Los Alto, Saratoga, San Marino

– Neighbouring schools: Piedmont High School, Los Altos High, Palo Alto High, Henry Gunn, Aragon High, Nueva School, Crystal Springs Uplands, The Branson School, Menlo High, Pinewood School, San Marino High

Highest Rental Yield

>5% gross yield: Riverside
>4% gross yield: Lo Jolla, San Diego, San Jose, Fresno, Irvine, San Clarita

– Neighbouring schools: Riverside STEM Academy, Canyon Crest Academy, Torrey Pines High, Westview High, Del Norte High, The Bishops School, La Jolla Country Day School, Francis Parker School, The Harder School, Basis Independent, Bellamine College Prep, Notre Dame High, University High Fresno, University High Irvine, Woodbridge High, Arnold Beckham High, TVT Community Day School, Academy of the Canyons

America Mortgage Concierge Program

We launched this free service last month to connect potential home buyers with our approved panel of realtors in each major U.S. city, which only focuses on overseas buyers. If you would like to learn more, please contact [email protected].

Our surprise guests!

At the end of August, we will be hosting a webinar with our California partner, who will present a “Guide to California Real Estate” along with a panel of the top realtors in Los Angeles, Orange County, and Bay Area to give you a real “on the ground”feel for all the points we discussed above and more.   

Stay tuned…this is going to be amazing! 

Public Schools - Guide to California Real Estate
Private School - Guide to California Real Estate

Sources: Niche, City-Data, US News, OECD data, US Census Bureau and respective school websites

Say Yes to Using Real Estate to Hedge Against Inflation!

Hedging Inflation With Real Estate

Hedging Inflation With Real Estate

While rising inflation and increased U.S. interest rates can cause stress for many, investing in real estate can be the best approach to hedging inflation. With inflation at a nearly 40-year high and the uncertainty in the stock market, investing in real estate is decidedly one of the best approaches to hedge inflation due to the market’s lack of correlation to the volatility of stocks, bonds, and the consistent returns the investment provides.

What does it mean to hedge against inflation?

Hedging is essential to foreign national and U.S. expat investors looking to have a diversified portfolio as it provides some form of protection against losses due to the volatility of markets and inflation. An inflation hedge is an investment that attempts to offset a currency’s value or purchasing power loss. This typically means investing in a ‘real’ asset, like real estate, with a ‘real’ return, which would be your rental yield.

Real estate has an intrinsic value that can provide monthly returns, which is essential in periods of rising inflation. Therefore, as an investor, putting your money into property investment can keep you ahead of inflation and minimize losses.

Investing in real estate is your best option.

Real estate is an excellent hedge against inflation as there is intrinsic value in the property, rental yields provide consistent cash dividends, and it is less affected by the economic climate and inflation. As inflation rises, there will always be a high demand for homes, which means rental prices and yield would also increase. 

The increase in demand for rental properties and low vacancy rates allow investors to increase their rent and stay ahead of inflation. Investors looking to purchase rental properties can capitalize on the increase in demand for rent and the increase in rental prices as you have pricing power, therefore maximizing your rental yield and returns. 

Rents and property values are typically correlated with rising consumer prices, so in a period of high demand and limited supply that we currently are experiencing, real estate has shown to be a wise and profitable investment.

What about increasing mortgage and interest rates?

The rise in interest rates has shown to be beneficial to rental property owners as fewer people are looking to purchase homes and would rather rent, causing the rental demand to skyrocket, leaving real estate investors in the perfect position.

Additionally, even though mortgage rates have gone up recently, they are still historically low; this means if you are a non-resident or U.S. expat investor, now is the time to capitalize on the opportunity and invest in real estate.

With the low supply of properties and the threat of increasing mortgage rates, now is the perfect time to jump on the opportunity and purchase investment properties to add to your portfolio as the rising interest rates make it more expensive to borrow money and push people to rent rather than take out a mortgage and purchase their own property. 

If you have been toying with investing in real estate, the current economic climate shows that now is the perfect time to do so. As a company, America Mortgages’ only focus is providing U.S. mortgage financing for foreign nationals and U.S. expats. 100% of our clients live and work abroad, making us the leading expert in this space. Now is the time to make hay while the sun shines. 

If you’re considering purchasing or cashing out of U.S. real estate, we’d love to hear from you. [email protected].