Outside of America, I don’t know how people do it anymore
Please note: further down in the article I show a table ranking house prices by city (492 global cities). You will see how cheap some of the real estate in many of the American cities are to their local residents in their local currency.
Take my word for it, the institutional money sees the same data I am showing you.
Housing prices by nation for 2022 (ranked by price to household income ratios) Click on the column headers to sort
The exosphere; house prices in the Socialist/Marxist/centrally managed nations
Despite all the residential real estate price increases in the West and rest of the world, housing in the United States is still relatively inexpensive. The people in the United States, whose dollar is the global reserve, benefit greatly from this privilege. This is why real estate is so cheap for its residents. US, Inc. has been able to effectively offshore its deficit spending and inflation far and wide, and since the US dollar is accepted virtually everywhere, it is always in demand.
Unfortunately for most of those around the rest of the world, the people are not so lucky.
Take a glance at all those socialist/Marxist Latin American nations; the prices of their housing is prohibitively expensive to the locals. Take a peek at those Marxist and centrally managed nation-states in Asia and the former Soviet Union. Ouch… their real estate is priced into the exosphere.
The thermosphere; Real estate prices in Eastern Europe, followed by Western Europe
As we move down the ladder, we come across the less expensive housing markets. As we can see from the table, most of the European nations are still prohibitively expensive, but the more advanced European economies seem to enjoy more affordable housing. Of course, I am painting with a broad brush, but housing in Germany, England, Sweden, and Belgium are less pricey to their residents than to those in Eastern Europe.
The mesosphere; Housing in the former commonwealth
This is of little solace to those who are trying to buy a house in Sydney or Toronto, but the overall house prices in Australia, New Zealand, and Canada are less expensive than in most other advanced economies, save a few nations in Western Europe. Plus we see a scattering of cheaper nations located in the Middle East, as well as South Africa, because, there doesn’t seem to be a lot of demand to live in those countries anymore. Those with money have been choosing to leave.
The Stratosphere and Troposphere; The U.S. housing market
Yes, this is difficult to believe, but housing prices in the U.S. in the local currency of US dollars is a relative bargain to its residents. According to the data points, overall housing price to income multiples in America are by far the lowest in the world.
There is a two (three) tiered market in the states, and it is all about in which city and state the real estate is located. Take a look at the 2022 city table ranking housing prices by price/income multiples to the residents of 490 cities around the world, and in their local currencies.
Hint: Click on the Price to Income Ratio column header to find the lowest ratios. The institutional money is way ahead of you.
There is still very inexpensive housing in many cities in the United States; and take my word for it, the institutional landlords are scooping up as much as they can while the doubters keep calling a top.
But I ask you, how long will the price to income ratio of Memphis housing remain at 1.22? How long will housing in Dallas cost only 2.15x household income on average? What about Tulsa’s ratio of 1.82?
I left NYC and Long Island to move to Maryland and Virginia expressly to buy rental properties. Even after the huge run up, Fairfax, VA still has a ratio of only 3.74! Yes, the people here make tons of dough, but that doesn’t mean prices have to be like in CA or NY. There are still places in Maryland and south of me in Virginia that still offer opportunities.
I still see a value proposition for wealthier out-of-town investors to own directly in dozens of cities in the states. The capitalization rates are still decent.
For those just starting out, you only need to buy one house for now. The learning curve is steep, but easily manageable. Once you get the first one down, move on to the next one. It’s a business that anyone can run.