How Housing Will Drive the U.S. Economy

How Housing Will Drive the U.S. Economy

Posted on: January 30, 2014

U.S. Economy

Image Source: Time Magazine

At MSR Americas, we select properties based on areas expected to yield the highest return on investment. We always pay close attention to how the economy and local community trends can impact housing prices.

A recent article for TIME suggests the housing market is one of the 5 major factors that will drive and strengthen the U.S. economy:

  1. Housing – The housing market has come back and is approaching a multiyear upswing.
  2. Oil and Gas – The technological breakthrough in horizontal drilling has created an unexpected boost in the oil and gas industry.
  3. Consumer Finances – With finances recovering and household debt lowering, consumer confidence is high and Americans are spending again.
  4. Banks – Banks are back on their feet and are lending strongly again, boosting the growth of the economy.
  5. Technology – The U.S. is invested in technology, contributing 29% of global research and development spending; second place is China with only 14%.

The article highlights how a rise in population will improve the economy and as a result this will have a positive impact for property investors. Recent reports from Census Bureau data have predicted that the U.S. population is expected to grow by 8% over the next 10 years. When the population increases the household-formation rates increase as well, this means that more people will have to make the decision to rent or to buy their first home. These rates dropped during the economic crisis of 2008-2009 but have since doubled and are continuing to rise. Since a large percentage of the population have been unable to purchase a home, this could mean that formation rates will increase quickly and residential investment may grow 15% to 20% annually over the next 4 years. An influx of homebuyers will cause a greater demand for housing, lowering the inventory of available homes on the market and thus increasing home prices.

We believe we are in the early stages of this growth, making it the right time to own U.S. rental income properties. At MSR Americas, we identify healthy communities specifically in the Orlando area that demonstrate steady growth rates, and we select Florida investment properties that are positioned to gain the most based on economic predictions. As the investor, you benefit from immediate net returns of 8-10% plus the potential for significant long term capital gains on your investment property.

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