The U.S. economy represents financial security. That is why, in times of crisis, investors prefer the North American country. Today we will show you some figures and economic variables that you should take into account so that your investment in real estate has a future.
How stable is the U.S. for investing in real estate?
The United States has the largest stock market in the world; It has the largest banking offer and 8 of the 10 largest companies on the planet. Moreover, its GDP per capita is by far the highest currently. That has positioned it as the first economy in the world (Macro Data, 2022).
Although the economy has ups and downs, the country has found a way to continue generating employment, growing and generating capital. That stability translates into security for investors, especially in real estate. The accepted theory is: as quality of life increases, real estate investments grow because more people are looking to move or invest there.
Why understand the U.S. economy?
The U.S. economy and financial decisions directly influence employment, foreign investment, quality of life, etc. All these decisions seek to give people more resources, invest and develop their communities. If that is achieved, real estate projects grow. Florida, according to data from CoreLogic, is the state with the highest real estate growth: 10.7% (Real Estate Market & Lifestyle, 2022).
The important thing to understand here is the law of supply and demand. In the real estate industry, for example, prices self-regulate based on the number of homes offered and the number of interested buyers. If those two variables are balanced, prices will be fair. However, if supply or demand is scarce, prices will go crazy.
1. GDP per capita
GDP per capita is an indicator that reflects the relationship between Gross Domestic Product and the number of inhabitants. The higher it is, the more productivity, the more economic growth and the better income per person. Assessing how income is distributed and understanding people’s ability to pay could help you in your real estate investment.
2. Human Development Index
This index measures the quality of life from several sectors: health, education, security, labor market, etc. For the real estate industry this is fundamental because it can show whether or not a place has future potential. In theory, the higher the index, the more people will want to live there; which means real estate development.
3. The corruption index
The latest corruption perception index puts Latin America in a rather murky picture. According to a report by Transparency International, there is no progress and several setbacks (France24, 2021). In that sense, moving resources to more regulated territories with greater control can help in your investment. The U.S. economy is arguably the most regulated in the world. That’s where its solidity comes from.
4. The movement of the dollar
The dollar is the most widely used currency in the world and its value tends to move constantly. If you live in Latin America and invest in the United States, clearly the exchange rate would benefit you. This is because you would receive rents in dollars. That is, if the U.S. economy is doing well, so will its investment.
5. Tourism
The real estate sector, especially that of Florida, moves by tourism. According to data from the consulting firm ForwardKeys, Miami already receives 13% more tourists than before the pandemic (Hosteltur, 2021). A city with growing tourism becomes more interesting for the real estate investor.
Is it safe to invest in the United States?
In investments there is nothing written. However, there are markets with potential whose numbers do not lie and should not be overlooked.
The U.S. economy has been the refuge of the world’s savings. Most countries have their reserves there. For years, it has established itself as the preferred place to invest in all types of assets: stocks, bonds, housing, etc. That has encouraged the creation of laws that regulate markets, but at the same time attract more capital.
On the real estate market, this has an enormous weight in the economy of the United States. People come to the country from all over the world to do business, live or invest. And they all need housing. Even so, not all investments work the same and the indicators change from one place to another. Despite the institutional strength of the United States, it is worth investigating and advising. The invitation is to evaluate all variables before investing. At PFS Realty we are real estate experts in Florida. If you recognize an opportunity in real estate, do not hesitate to write to us.
References
Macro data. (2022). United States: The No. 1 economy in the world. Expansion. https://datosmacro.expansion.com/analisis/los-mejores/pais-primera-economia#:~:text=Estados%20Unidos%20es%20la%20primera,%2C7%25%20respecto%20a%202020
France 24. (2021). Is the fight against corruption in Latin America a lost cause? https://www.france24.com/es/programas/el-debate/20211210-corrupcion-latinoamerica-corruptos-venezuela-haiti
Hosteltur. (2021). Miami already attracts 13% more Latin Americans than before the pandemic. https://www.hosteltur.com/lat/148207_miami-ya-atrae-13-mas-latinoamericanos-que-antes-de-la-pandemia.html
Real Estate Market & Lifestyle. (2022). In 2022, Florida will be the fastest-growing state in the U.S. housing market https://www.realestatemarket.com.mx/noticias/mercado-inmobiliario/36544-en-2022-florida-sera-el-estado-con-mayor-crecimiento-en-el-mercado-inmobiliario-de-ee-uu#:~:text=de%20las%sales.-, Florida%20encabeza%20%2010.7%25)%20una%20list%20de%20 states%20que,solo%%202.8%20 percent20%
