Offshore Guidebook | Real Estate Investor Magazine Offshore Guidebook 2013 | Seite 18

USA
property boom that they just built – whether or
not there was demand. In fact, in 2004 it was

believed that for every four houses built, one stood
empty. 25% of properties were unoccupied and
people didn’t care as they were just focusing on the
capital growth. It is estimated that there are
as many as 10 million properties in oversupply.

b. The important thing to understand is that for over
five years there has been no supply whatsoever. The
population continues to grow and so the demand
and supply are coming back into equilibrium.
c. The final thing to be aware of is the ‘Shadow
Inventory’ where the banks are holding back
repossessed inventory to ensure they don’t flood
the market. One has to be very careful about this
and do one’s research as this can be a major risk in
certain markets.
One needs to understand these challenges, but it
is clear that things have changed, there is no more
reckless lending (in fact, at the moment it is mainly
cash-only purchases) and the supply and demand

graphs are back into equilibrium. In fact, in 2010,
IPS decided, although there was opportunity, there
was too much risk to invest (see the 2010 USA
Property Report at www.ipsinvest.com), we now
believe this is a market which investors need to
understand and take advantage of. There are three
reasons for this.
Three reasons we are excited about the
opportunity in USA
The story
When investing you always need to understand what
is the story behind why you should invest. We believe
that the US property at the moment offers a very
compelling story for a number of reasons.
The US economy
You need to read the USA Property Report – 2010
16

Offshore Handbook 2013

to understand where the economy was in 2010, the
unemployment, national debt, consumer spending,

etc. On the whole there were many parallels
between the USA in 2010 and the USA in the
Great Depression of 1929. Unemployment in the
Great Depression was 25% and if you compare
apples with apples, then unemployment in 2010
was 24.9%. The national debt rose to a position
where the US technically went bankrupt on the
f irst of August 2011, as their debt repayments
exceeded 100% of their earnings. The only hope for
repaying this debt is when the ‘Y-generation” reach
an influential point in the economy (average age 35)
and this will not happen till 2025. Finally 70% of
the US economy is based on consumption and with
the ‘baby-boomers’ hitting retirement (10 000 per
day) this spending is decreasing.
However, taking the negatives of 2010 and
even the fact that many of the problems remain,
American’s are much more positive that the economy
is recovering. Employment numbers have recovered,
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