Real estate market USA

The US are still the number one destination for immigrants. No matter which region you choose, you will always meet some Europeans (the majority of Europeans are living in New York, California, Florida, Colorado and Arizona). The US real estate market is very well organized. There are, by now, so many foreigners in the US who wish to buy houses that the local market has adjusted to this and there are already large networks that make the process easier. The US real estate market is booming at present, which has a positive effect on prices as well. The demand and the customers faith are constantly high. The number of real estate owners is increasing steadily. According to the National Association of Home Builders an 8% increase in sales of new property could be registered between 1997 and 1998. Of course, prices vary from state to state. However, there are some guidelines for this:

1. It is cheaper inside the country than near the coast

2. The North is cheaper than the South or Mid-West

3. City is more expensive than country

4. The nearer the object is to a center of population, the more expensive it is. The most expensive objects are always in the hearts of the population centers.

Living is cheapest in the following states: Florida, Alabama, Idaho, Nebraska, Wisconsin and Wyoming.

The cheapest city areas are: Minneapolis, St. Louis, Missouri and Houston, Texas. Some rather expensive states are: New York, New Jersey, Virginia and Hawaii. The most exclusive and thus most expensive living areas are in: California - especially Beverly Hills, Brentwood, La Jolla, Newport Beach, Palos Verdes, San Francisco and San Mateo; furthermore Wellesley in Massachusetts, and Greenwich and Darien in Connecticut.

FINANCING: You will usually buy real estate with the help of a loan, more precisely a mortgage. In the case of real estate, a mortgage is a kind of security as well. In case the borrower cannot repay the loan, for whatever reasons, the creditor may out the object up for compulsory auction.

Usually, US creditors require a lot of information from the potential borrower before granting a loan. If you are financing 20% yourself, a loan is possible, starting at 30% hardly any documentation is necessary. In addition to the standard information, you have to present everything related to your financial history over the past three years. Furthermore, you must present everything that can prove your creditworthiness, such as salary statements, tax assessment notes, credit card accounts. As mentioned before, it may be beneficial if you have taken out bigger loans before and repaid them on time, since this especially proves your creditworthiness. Mortgages usually run for 15 or 30 years. The creditor, usually a bank (be careful with private creditors) will check all aspects necessary for this. It will also check whether the value of the object corresponds with the loan sum and can thus serve as an appropriate security. However, creditors will usually not be prepared to grant you a mortgage over the full purchase price so that you usually have to finance part of it yourself, the sum depends on the creditor or on the state. You should always take up a loan at a larger bank in order to have it stay with the same bank for the entire duration. Smaller banks trade with these loans and sell them to bigger banks so that sometimes you won't even know you really have to pay. That way, you might get a bill and pay it and learn only later that you have been deceived. This is not pessimism, this has indeed happened quite frequently before. So please be careful! Furthermore, larger banks often don't ask for a prepayment penalty of you wish to pay off your loan prematurely (e.g. if you have taken out a loan for ten years but come into an inheritance after three).

Maybe your real estate agent can help you find a loan. He will either help you arrange a loan via another realtor or refer you to a local bank or larger credit institution. There are also special loan agents (usually to be found under mortgage broker in the Yellow Pages) that are solely responsible for helping with finding and taking out a loan. Mortgage brokers are usually paid 1% of your mortgage. Local creditors (banks or other credit institutions) take over the loans of local realtors, collect up to 100 of them and then sell them to larger credit institutions such as the Federal National Mortgage Association. Of course, you can also do this without a realtor and find a loan for yourself.

FINDING THE RIGHT OBJECT: The best way to find a suitable piece of real estate is still looking in the local newspapers. Usually, the full real estate section will be found in the Sunday editions. Apart from that there is, of course, the internet, there are always special pages with offers to be found there. Also watch for signs in front of suitable objects, telling you that the apartment or house is for sale or rent. Of course there are always realtors who will help you with the search. If you only want to rent an apartment, you can do without one and save costs. However, if you want to buy an object, it is advisable to hire a realtor, in case you are not familiar with the local regulations. Most realtors use the system of Multiple Listing Services. They have access to the national databases for all pieces of real estate available for sale. So you don't necessarily have to hire a realtor from the region you wish to settle in. Even if you are living in Texas at the moment but want to move to Montana, you can ask a Texan realtor and he can give you a list with all the objects in Montana that meet your requirements.

MORTGAGES ONLINE: There are already several mortgage packages offered by companies such as Microsoft, Intuit, E-Loan or iOwn that allow you to compare all loan costs and conditions. Some packages will ask you how long you are planning to live in one place, which will be used to determine whether you need a short or long-term loan. A great website of the US government is the US Department of Housing and Urban Development (HUD) site. It offers information on all aspects of real estate acquisition, from finding a realtor to taking up a mortgage.

Useful internet addresses:

You will find further information about the acquisition of real estate, e.g. about realtors, kinds of mortgages and additional costs in our next newsletter in about one month, or in our book.