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US property investors look to the future

24th June 2009 | back to article listings BACK    print this article PRINT

Predicting the future is never easy. At times it may seem that economic commentators are - at best - like meteorologists trying to give long-distance weather forecasts and - at worst - like cranky crystal ball gazers. After all, few predicted anything like the credit crunch before it happened and nobody realised when the US subprime market first got into trouble just how far-reaching the worldwide economic ramifications would be.

For that reason, some may consider it difficult to have confidence in the future. Yet at the same time, long term property investors undertake such ventures both because of such confidence and a lack of it. The second element rejects the short-termism of seeking a quick buck because events can throw an economy off course, precisely the sort of thing that led to many buying in 2006 and 2007 getting their fingers burned. Yet buyers may also look with more reassurance on the historical evidence that - over time - the good years will outweigh the bad and the peaks will more than make up for the troughs.

Even so, those looking at Florida and California may wish for a bit of guidance over the future. Much as the subprime crash that has hit these states harder than most has led to many bargains becoming available - not least in the foreclosed market - the potential value of homes a decade from now may be on the minds of many considering a purchase.

For this reason, a new website called SmartZip has been set up to give ratings on the prospects for homes in these two states to gain in value over the next ten years, Bay Area news group reports.

Speaking to the news provider, chief executive of the site Tom Glassanos said that what other property sites offer "is what a property will cost if it is bought or sold today. SmartZip tells you what the property is worth, what its real value is going to be in the future".

The site rates homes such as a foreclosed home in Victorville in California, currently available for a knock-down $33,800 (£20,500), which it gives at a rating of 94 out of 100, in other words, very high. This would see it grow 42 per cent to $47,947 over the decade.

Only time will tell if such predictions can be correct, of course and the site has admitted as much, Bay Area News Group noted. Whether investors find such a site useful may therefore be a matter for individual buyers, as some might trust it more than others. Moreover, any ten-year prediction may not accommodate the possibility of other financial crises.

However, any kind of investment carries the risk of future economic problems. For those who do buy in the US, or anywhere else, the hope will be that the historical truism that property will gain in value over a long enough period irrespective of periodic falls will remain true.

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