Are you a Bargain hunter?

The beleaguered American housing market, where the world's financial crisis began, may not be showing signs of recovery yet. But this is not bad news for everyone.

The Standard & Poor's/Case-Shiller Housing Index, which monitors house prices across the 20 largest urban ce 0ntres in the US, showed that houses prices had plummeted by 16.6 per cent in August from the same month a year before - the biggest drop since the Index's inception in 2000.

And it is the more popular tourist areas which seem to be bearing the brunt of the housing slump with Las Vegas declining by 30 per cent in a year and Florida housing losing 28 per cent.

There are also many foreclosed houses on the market with owners opting to surrender mortgages and loans and selling their homes for a bargain price. In the second quarter of this year nearly 120,000 default notices were issued - a rise of 125% on the same period last year.

So does this mean that there are housing "bargains" in America out there for cash-rich buyers eager for a cut-price overseas home. Some critics have already talked about a wave of international vultures' moving into some US markets.

Industry professionals are divided as to whether the market has already dipped to its lowest level or there are further falls to follow.

Fadi Moussalli, regional director, International Capital Group at Jones Lang LaSalle MENA, urges any UAE buyers tempted by a US "bargain buy" in the residential market to err on the side of the caution.

He says global consensus is that the property market in the US is going to get worse before it gets better.

Moussalli says: "Certainly Florida and California are much sought-after destinations, and some bargains indeed look appealing. There is no harm is starting to review investment opportunities there, but I doubt we have seen the bottom of the market yet."

IHS Global Insight, one of the world's leading companies for economic and financial forecasting is also guarded. Its first quarter 2008 update of the US housing valuation analysis, House Prices in America, showed that 84 per cent of the country's housing market had declined.

Global Insight found that house prices were pushed down across the nation with fewer high-priced home sales and an abundance of foreclosed properties being sold at a discount. Contributing to the downward pressure were significantly tighter credit standards which reduced the amount of borrowing available for home purchasers.

Excess supply

Jeannine Cataldi, senior economist and manager of Global Insight's Regional Real Estate Service, says: "The housing market will take some time to recover as consumers are constrained not only by tight credit standards but rising costs in other areas of the economy. There is also excess supply that needs to be absorbed, plus the rate of foreclosures entering the markets needs to slow down before housing can begin to pull out of its current downward trend.''

However, Mike Bridge, director of property exhibition organisers Dubai Shows, says the sunshine state of Florida is continuing to attract interest and purchases from both nationals and expatriates based in the UAE. And, he says, that there has never been a better time to buy.

"We are in close contact with developers and agents throughout America. The feeling throughout the industry is that Florida has already reached rock bottom and it has been in the doldrums longer than other states. They feel that prices are as low as they are going to get.''

Bridge says at a property exhibition which he recently held in Dubai, there was brisk business for houses in Florida.

''At an exhibition we staged in May in Dubai, one agent sold 20 townhouses in Florida to buyers in the UAE where he had not sold one in the 12 months before. I would tell people considering buying in the US to look at location, location, location, because properties in Florida that have easy access to Disneyworld, can be rented out for up to 32 weeks a year and Mickey Mouse is subprime proof.''

Neil Woodward from realty company Florida Choice agrees and believes that houses in Orlando represent tremendous value for money.

He says: "We currently have town houses for $109,000 for a 1,200 sq ft brand new home with air conditioning and a fully fitted kitchen and a detached, fully furnished five bedroom villa with a private pool can be bought for $269,000.''

Similarly, real estate marketing firm SHVO, which is based in New York, but also has an office in Dubai, reported keen interest in its American properties when it exhibited at the recent Cityscape 2008.

Quick decisions

SHVO presented its New York Downtown Hotel and Residences - the only New York real estate project at Cityscape.

In light of the current global economic concerns, the company's head, Michael SHVO, said: "Plenty of people are buying. That's something we learned firsthand at the show.

What's more, we found that the buyers at Cityscape tended to make quick decisions when faced with groundbreaking investment opportunities in prime locations. After all, these are the type of properties that maintain their value in uncertain times. ''

America's National Association of Realtors (NAR) is also upbeat about the country's appeal to overseas investors.

Its president, Richard Gaylord, believes that foreign exchange rates have also contributed to making US homes more affordable to international buyers.

''Many buyers recognise that real estate is an excellent investment and are drawn today by an abundant inventory, low interest and a softer dollar. These conditions allow them to own their own piece of the American dream."

According to the NAR, the median price of homes purchased by foreigners in Florida is $285,000 with some 60 per cent paying in cash without the need for a mortgage.

International buyers also tend to purchase more expensive properties costing an average of 36 per cent more than the typical domestic buyer's home purchase.

In fact, more than 14 per cent of properties sold to international buyers sold in excess of $750,000.

One UAE resident who has already bought in Florida is William Green. His purchase of a four bedroom house, however, came after much research and three visits to the Sunshine State.

Green kept a close watch on house prices and took advantage of the economic downturn and a favourable exchange rate.

He believes he got a very good deal on the purchase price with the family paying $35,000 below the bank valuation and $125,000 below the asking price of similar properties.

Green says: ''Only time will tell whether we have made a good investment, but I believe that the house will gain in value over the coming years and, in the meantime, we have use of the property when we want it for a family holiday.''

The author is a freelance writer based in Dubai.