Buy, buy American pie

For decades the American dream seemed to be up for grabs, something to be achieved by everyone, whether you had the money to buy into it or not.
The house, the car, it was all reachable, with a little help from your friendly bank manager. But it all turned out to be a pie in the sky and when the credit crunch hit, the great dream became an all American nightmare. But the new president and billions of dollars in stimulus packages has brought a new optimism. We talk to Swedish borne Stefan Elofsson who has been working in the real-estate business in Dallas/Fort Worth Texas for the last ten years and we ask him if he saw it coming.

By Camilla Kaas Stock

"Well, I think it was pretty obvious that the market from 2000-2007 was NOT normal. When you have financial institutions "giving" away money to buyer's without verifying their income and making sure they can actually afford the home, you are asking for trouble. When you can buy a house and move in without spending a dollar, there is very little or no motivation for a homeowner to stay if their home ends up in negative equity. In the past, buyer's would have to put 10-20% as a down payment, which was much healthier," says Stefan who originally came to America to study music, but after several years in the music industry, ended up selling homes in Texas.

How has the property market in your area been affected by the global downturn?

"The Texas market is holding up reasonably good compared to other markets, like California, Florida and Nevada, where the appreciation of properties skyrocketed and then couldn't sustain itself. Our market never had that, but instead was growing steadily at 3-5% per year. Of course we saw a downturn when the 100% financing was no longer available, but I think this was a good thing as it helped create this situation in the first place".

Have you seen a lot of worried people and distressed sales?

"Yes, especially with the job market being so volatile. Again, Texas is not as bad as some other areas of the country, but we are certainly affected too. The foreclosure rate in Dallas/Fort Worth is somewhere around 3000 homes for sale every month, which is up significantly from just a few years ago when it was about 1000-1300 per month".

How have other parts of the economy been hit? Have you seen many businesses go under?

"Yes. Retailers have been hit pretty hard. I also own a Business Brokerage were we buy and sell businesses and many of the owners are struggling to stay afloat. This recession has affected everybody from the big national chain stores down to the local Mom & Pop Stores. I do have to say that the big Discount stores like Wal-Mart and Costco are doing great, which is kind of interesting because not everything is a "discount" there....."

Are you seeing signs that the market is picking up again now?

"The market is slowly making a comeback. We still have a lot of "bad loans" to get rid of, and the majority of the ARM (Adjustable Rate Mortgages) will start to reset in 2010-2011, so we have a few more years before this is going to turn around".

What about the general mood, has that changed? Are people feeling more optimistic?

"I think peoples attitudes are changing as they now are beginning to have a greater understanding of the situation. After the election last year most people were almost expecting the new government to "flick a switch" and then everything would be GREAT! Well, that didn't happen of course, and I think people are realizing it will take work to turn it around and we are all going to have to pitch in".

If anybody is interested in investing in property in the US, do you think this is the right time?

"I believe NOW is the best time to invest. With a combination of low interest rates, Federal incentive programs, and banks selling at a discount, I don't think you can ask for a better time. The rental market is sky rocketing due to so many people having to leave their homes, so my suggestion is to invest in either Single Family or Multi Family Properties with a healthy cash flow and holding on to them until the cycle starts to turn. I currently get numerous investors through the door snapping up as much as they can get their hands on..."

And finally what would you say to other people who are thinking of relocating to America? Can everybody achieve the American dream?

"I absolutely love living here and would highly recommend it. Especially the North Texas area, which probably has the best job opportunities in the country right now. We have more Fortune 500 companies' headquarters in the DFW Metroplex than any other city in the country which creates a lot of jobs. On the other hand, I think the average American works more hours than in any other culture and as far as having an opportunity to advance and create your own success, which is as individual as each person, I don't think geography has any part in it. You will always have challenges, they may be a little different based on where you are, but it is how you handle them that counts", says Stefan.

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