British visitors to America have grown used to the strange sensation of seeing bargains at every turn. They return from New York or Florida laden with jeans, designer shoes, CDs and iPods. Now they are buying homes, too.
The United States property market, undergoing troubled times because of the credit crisis, has suddenly become great value for Britons dismayed by sky-high house prices at home. The market has been driven by an exchange rate that has risen above two dollars to the pound for the first time since the early 1980s.
British buyers come in all shapes and sizes. Some are looking for holiday homes at prices they could not have hoped to pay a few years ago. Others are selling their British houses and moving to the US. Still others are starting to buy shops and businesses. A recent survey showed that one in five US estate agents has sold a home to a foreign buyer in the past year, and 12% were British, representing a third of all European buyers. In Manhattan the situation is even more foreign-dominated, with overseas buyers making up about a third of purchases in new condominiums (blocks of flats with the freehold jointly owned by the tenants).
Maria Crotty (39) has done well out of the dollar crisis. She had owned a two-bedroom flat in north London. She sold it and banked the cash. While it sat in the bank as she shopped for an American property, she watched the pound rise, bringing her thousands of unexpected dollars. ”It changed about 25 cents on the pound while the money was in the bank,” she said.
Crotty, a Sheffield-born finance director of a Manhattan video-streaming company, eventually used the cash to buy a four-bedroom house on Shelter Island, an idyllic spot off Long Island close to the Hamptons, where New York’s rich and famous play. Crotty’s neighbours include design guru Jonathan Adler and international hotelier Andre Balazs. She rents a flat in Manhattan and spends weekends on Shelter Island.
”It beats north London. I now have my own land with trees and deer. My old home back in London was an ex-council flat,” she said.
The sheer speed of the collapse of the dollar is key. The pound has risen 34% against the dollar compared with five years ago, including 10% in the past 12 months. The euro has done even better, jumping 47% since 2002. Crotty is only one of many Britons and other Europeans now looking to use their unexpected windfalls to buy a slice of America.
James Rooke (30) a management consultant, is on the hunt for a flat in New York’s downtown financial district. He brought his nest egg over from Britain, cashing in on the exchange rate and giving him enough money to invest in Manhattan. ”The exchange rate was the main reason I decided to buy in the US,” Rooke said. He hopes to have an apartment next year, owning space in one of the many towering new housing developments sprouting up all over Manhattan. ”To own a slice of Manhattan is just amazing. It is world-famous and so full of history. It has got so much magic associated with it,” he said.
Experts agree that buying in New York with pounds is a remarkable investment opportunity that was unexpected a few years ago. The dollar’s collapse has taken many by surprise and rendered one of America’s most elite housing markets suddenly affordable to foreigners, even as suffering locals remain priced out. ”It really is an absolute no-brainer,” said Eric McLendon, an estate agent with upmarket property firm Corcoran. ”We are dealing with people from the UK, Ireland and all over Europe. Because of the exchange rate there is no better time.”
It is not just Manhattan. Elsewhere falling house prices have seen flocks of Britons attracted to other states such as California and Florida. Many are snapping up holiday homes, attracted by the lure of sunshine and beachfront property.
Numerous companies, especially in Florida, have been set up solely to cater for Britons trying to buy property in the US. ”People can’t believe the amount and type of property you can get. They would expect to pay twice that amount for the same thing in the UK,” said Howard Thorne, co-owner of the Florida-based Homes of America company. Thorne’s firm is advertising three-bedroom, three-bathroom houses with a pool in Florida for $315 000 — about £150 000.
Thorne said that some Britons are even starting to use the strong pound to invest in shops and businesses, not just houses. Rooke is thinking of moving beyond New York and eventually buying something in another state to let. ”I would not have considered it previously, but with things going the way they are the sort of value you can get somewhere down in Florida for an investment is very impressive,” he said.
About one fifth of foreign buyers in the US make purchases solely for investment. About half are snapping up holiday homes. The remainder are people like Rachel Burley (41). She is a married publishing executive from Suffolk with two children and wants to buy a house in Brooklyn. ”[The exchange rate] was a really nice windfall,” she said ”This is an investment to some degree, but it is also going to be our home.” – Guardian Unlimited Â