Everything I read, everything I see and everything I hear confirms the statement that “America is becoming a nation of renters“. We talk about this at great length at our free U.S. real estate classes because it’s really good news for Canadian investors.
Here’s what I (as a keen observer) see happening. Many Americans purchased a home at, let’s say $400,000. They mortgaged it at $300,000. Today, that property may be worth $100,000 or less. Why would they continue to pay a $300,000 mortgage on a property that is now worth a third of that. Short answer is that they’re not. According to the Wall Street Journal in an August 09th article, almost 3 million Americans walked away from their mortgages and chose to rent instead just in the second quarter of this year.
This morning, Bloomberg reports that “In the housing market inhabited by most Americans, prices have fallen 30 percent or more since the peak in 2007. That’s a steeper decline than during the Depression. Some people have had their homes on the market for a year without a single offer. Almost a quarter of American homeowners owe more on their house than it’s worth. Another quarter have less than 20 percent equity. About half of homeowners couldn’t get a mortgage if they applied today, says Paul Dales, senior U.S. economist for Capital Economics.”
Very sad state of affairs for American homeowners but a windfall for Canadian investors.
If you’re interested in finding out more, we provide free, two hour classes across the country and a website dedicated to information.