British Overseas property investors that bought into the US housing market before 2010 should have seen their investment grow by over 50 per cent over the last decade.
The combined value of every residential home in the United States is now a staggering $33.6 trillion – almost equal to the combined 2018 GDPs of the USA ($20.5 trillion) and China ($13.6 trillion), by far the world’s two largest national economies.
If all the 2,200+ billionaires in the world (as of 2018) were to pool their assets, their paltry $9.1 trillion in wealth couldn’t even buy a third of the US housing market
Over the past year, between the end of 2018 and the end of 2019, the total value of every residential property in the country grew by 3.4 per cent, or approximately $1.1 trillion – a sum higher than the entire 2018 GDP of all but 15 nations.
But the real story could be in measuring the difference a decade can make: Between 2010 and the end of 2019, the total value of the US housing market grew by 51 per cent, or $11.3 trillion.
Leading the way in US housing market growth was California. Over the past decade, California’s housing stock grew in value by more than $3.1 trillion, by far the largest such growth of any single state – and comfortably more than the combined total of the next four on the list: Texas (+$886 billion), Florida (+$839 billion), Washington (+$507 billion) and New York (+$495 billion).
Also, three of the five individual metro markets in which housing has gained the most value over the past decade are in California: Los Angeles (+$1.065 billion), San Francisco (+$872 billion), New York (+$656 billion), San Jose (+$360 billion) and Seattle (+$356 billion).
However, in recent times the California property market has slowed. In 2019, the states with the largest individual contributions to growth in value of the US housing market were Texas (+$89 billion), California (+$77 billion), Florida (+$69 billion), Pennsylvania (+$47 billion) and Washington (+$45 billion).
In the past year, only one California metro was on the list of the five largest contributors to housing stock value gain: Washington, D.C. (+$38 billion), Phoenix ($+30 billion), Seattle (+$30 billion) Los Angeles (+$29 billion) and Dallas (+$23 billion).
There are generally two ways in which total housing value can grow: Appreciation among existing homes, and/or additions to the local housing stock itself. Roughly 86 per cent, or $9.7 trillion, of the growth in value of the U.S. housing stock over the past decade can be attributed to the simple, steady appreciation of existing homes over this period.
The remainder comes from builders adding value to the US housing market through newly built homes. In almost every individual market, a similar pattern holds true – the majority of overall housing value growth can be attributed to appreciation.
However, not in every case. In Charlotte, the total housing stock value grew by 110 per cent over the decade – 63 per cent of which is attributable to added value from new homes, and 47 per cent attributable to appreciation. A large part of growth in Austin (55 per cent from the total 126 per cent) over the same period can also be attributed to new housing stock added over the past 10 years.
It seems likely that overseas property investors that can find the right part of the US housing market to invest in can again look forward to strong capital gains over the next decade.