In a world where economic conditions and investment opportunities are constantly fluctuating, added to the war in Europe, and social instability in countries like France, without a doubt, the United States continues to lead by far, -for security and stability-, as an exclusive site to invest in real estate.
Economic instability is the main motivator for Latin American investors to invest in the northern country, and Argentines are not far behind. Distance becomes a negligible factor in these modern times, when you can buy a property in another country and hemisphere virtually, either as a natural person or with a company (which can also be created remotely).
According to the latest Coldwell Banker Global Luxury Report, Argentina is one of the countries most likely to perceive the United States as a safe investment in real estate, with 81% of those surveyed adhering to this vision, and 83% classifying to the current market conditions in this country as “excellent” or “good”, a number similar to that of the European Union and Canada. Of 5 Argentine respondents, 4 claimed to have residential properties outside their country. In addition, 2 out of 5 responded that one of their main motivations for buying property in the United States would be frequent business trips to certain cities in this country.
Along the same lines, Chad Gallagher, co-founder of Home 365, saw a significant increase in foreign investors from economically volatile countries in his company, especially those with extremely high levels of inflation, such as Argentina, which had inflation of almost 95% in 2022. and 120% projected for 2023.
Indicators of economic strength in the United States
In contrast, inflation in the United States was 6.5% during the same period, one of the highest values it reached in the last 40 years, and it is estimated that it will close at 4.5% in 2023. That is, even in one of its years with the highest inflation, this country has an annual inflation that in the South American country is almost double in just one month.
A good indicator of the strength of the US economy is its unemployment rate. In 2022, this was 3.6%, a significant drop compared to 5.4% in 2021 and 8.1% in 2020, years marked by the impact of Covid-19. Its rapid recovery to pre-pandemic levels says a lot about the ability of the North American country to overcome adversity in a short time.
The US economy grew an annualized 2% in the first quarter of 2023, well above the 1.3% in the second estimate and forecasts of 1.4%. Consumer spending growth accelerated more than expected to 4.2%, the strongest in almost two years. Spending on durable goods increased 16.3% and services 3.2%.
For Argentine savers, investing in real estate in the United States is safe and profitable at any time and for various reasons. First, it offers protection against inflation, which, as mentioned above, is extremely high in Argentina where real estate prices have fallen precipitously in recent years and with no slowdown in sight.
Property in the United States, by contrast, tends to appreciate over the years. On average, they have appreciated 4.4% per year since 1991, but after the pandemic, these numbers accelerated. Prices for single-family homes, for example, grew by 18.7% from the first quarter of 2021 to the first quarter of 2022, the highest jump in the last 31 years. In fact, there are states in which this increase was even higher, such as Florida, where they increased by 29.8% in that period, or Arizona, with 27.5%.
The United States offers a favorable framework in which to make real estate investments, since it is a stable market, has a strong economy, legal certainty, stable demand for rental and purchase of properties, and profitability in dollars, which is especially attractive for Argentine investors.
José María Softa is Founder Partner ofkonnectia
Specialist in real estate developments in the United States
e planning ad
in this note
ttn-25