The American Property Price Paradox
During a crisis, potential buyers, as a rule, are divided into two camps: those who are afraid of large purchases and prefer to leave their savings for a rainy day; and those who enjoy the most "delicious" prices and invest in the future, of course, not without risk.
The demand of Russian investors for overseas real estate, in particular for American, grew by 20%. And this is quite easily explained. There have not been such prices on the US market for 30 years.

Of course, this does not apply to the entire market. Therefore, let's try to figure out what makes sense to invest in, and what is not worth buying yet.

If we talk about private houses, then the prices here not only did not fall, but increased by 4.4%. And this is even despite the fact that in March of this year there was a colossal collapse in the number of transactions - by 17%. Experts explain this behavior by the fact that after the 2008 crisis, construction companies cannot get into the rhythm and meet the demand for residential buildings, plus isolation during the pandemic forced people to stay away from apartment buildings and have the opportunity to "walk" in the yard. Yes, and elderly people now prefer to spend their old age in their home, and not in social institutions. Therefore, new houses do not have time to be built, and secondary housing is vacated more slowly, which means that demand increases and prices increase. For example, for the first time in the history of the US real estate market, the average price of one property reached $ 330,000.

More specifically, the average cost of housing in Queens in the first half of the year increased by 10% compared to the same period last year, and in Brooklyn by 8% and amounted to $ 450,000. And this is all against the background of a decline in the number of transactions in the same Brooklyn by 21%.
The market in Manhattan has a similar situation. There, the average price of real estate fell by 18%, while demand fell by as much as 54%. Brokers were allowed to display objects only on June 22, so the data on demand and closing of deals are still at the same level, although there is an influx of potential customers and an increase in the number of views.

So the real estate market in the United States is slowly reviving, but according to experts, it will take another year or two before it reaches the figures of 2018.

As I said earlier, investing today or not depends on the specific buyer and specific property. You can't just give in to desire and temptation when looking at world economic news. In each transaction, it is necessary to take into account the possible risks and calculate the expected benefits. It is necessary to approach the purchase wisely, to assess the specifics of each specific city, region and property. It is important to understand your ultimate goal: to rent out the premises or, for example, move yourself. And only after carefully studying the issue of investing in overseas property, your investments will generate income.
Despite the suspension of the construction of new residential properties due to the pandemic, experts argue that the demand for housing in the United States is still present and that it will play one of the key roles in the economic recovery.
At the same time, in New York in early spring, the real estate market grew in line with forecasts, but in June there was the first significant decline in prices. The number of transactions fell by 48% in just a week, while the average property value dropped by 11%. It is worth noting that studies of various companies indicate that the current supply exceeds demand, which means that buyers have an advantage and can, in a sense, conduct their own pricing policy, that is, buy housing much cheaper than it could have done for another month back. I can confidently say that property prices in New York will not increase over the next year, and according to some forecasts, we can expect another 3.3% decline in prices. I think it is worth noting that the benefit of buying a home is the difference in the cost of the home itself, a decrease in the mortgage interest rate to 3.3% and an increase in the cost of rental housing. For example, you buy a certain residential building on quite favorable terms, and then rent it out and get your profit. Indeed, only in New York, the rental price has increased by 30%. Probably New York is the most interesting place for investing in real estate with subsequent lease. Like Moscow, 77% of it consists of rental space - mainly one and two-room apartments. And one more note, it is worth paying attention to "elite" housing, and not to affordable, since it is precisely this that is not covered by New York's rent control laws.
Real estate appraisal in the USA: new service from Fincase
The Fincase team has extensive experience in assessing Russian real estate, we are among the five best PropTech companies in Russia. The implemented projects provided a deep understanding of machine learning algorithms that are necessary for analyzing data on the real estate market, so now our main task is to help tens of thousands of investors make the right decisions regarding the choice of an investment object.
Based on our Russian experience, my team and I developed a new product, but for the US market. We analyzed real estate appraisal services used by brokers and developers and came to the conclusion that we need a new product that will assess the attractiveness of real estate investments.

Investing in real estate has long been considered one of the safest ways to invest money. In the minds of people, real estate is associated with reliability and constant price increases. Investments are made in commercial, residential real estate, real estate construction or foreign properties. Each of them has its own characteristics and distinctive features that characterize not only the property itself, as an investment object, but also as a whole approach to investing money. Each of them is distinguished by its own risks, which the investor assumes, strategies, and, accordingly, making a profit.

For example, the hallmark of commercial real estate is a high threshold for entering a business. Private individuals cannot just buy an office or bar and rent it out. The risks are also quite high. It is quite difficult for a beginner to choose the right property, and he also needs to make competent repairs, attract the right clients and conclude a contract with them. This type of investment requires maximum investment, but after 8-10 years the investment pays off with maximum profit.
We conducted research on what people are guided by when buying real estate. The main factor was the infrastructure - the ecosystem of the district.
When creating a product, we conducted research and found out what people are guided by when buying real estate. With the importance of the factors of area, repair, comfort, year of construction, but still the main factor was the infrastructure - the ecosystem of the district. Today, buyers of real estate are mainly family people with children, so real estate is in great demand, which is located near clinics, schools, swimming pools, parks, children's clubs, sports complexes. Younger people who do not have children are most interested in infrastructure, which offers shopping and entertainment centers, nightclubs, offices, banks, parking and so on. People of retirement age prefer sleeping areas away from the city center, with nearby bus stops, pharmacies, clinics, shops. In general, each category of buyers has its own needs, which are influenced by the adjacent infrastructure of the area.

This sounds like an obvious fact, but there are many pitfalls in this topic - how to analyze a building site, how to estimate the value relative to market value, how to rank significant infrastructure requirements depending on the real estate sector, how to make an accurate calculation of the expected return.

The service integrates with Google Maps and displays data about the infrastructure on a familiar interface. The gradation of green color shows a low or high level of development of the area according to the given parameters.
The launch of the service is planned for autumn 2020 with the appearance of the first users.

Investing in real estate is one of the most talked about and popular investment methods. Fincase's mission is to create a product that will provide the user with the most reliable information about the market situation and provide data for the right investment decision

Dmitry Tsyplakov, CEO/Product manager of Fincase
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