The Hot US Real Estate Market And Its Effect On Ghana

The year 2005 is gradually turning out to be the third year in a row that the US has seen a booming real estate market which is slowly pulling its economy out of the doldrums.
All over the US today, especially along the eastern corridor and the west coast, real estate agents are having a field day grappling over the widespread scramble by ordinary Americans to buy homes in their various communities. Having been savagely burnt by the "dot-com" fiasco in the stock market of the late 1990s, Americans are waking up to the realities of their "brick and mortar" investment--------------a place you can call home which can never be taken away from you unless you default on your mortgage! The feeling that your life savings are truly concentrated in the pad you call your own which you can see everyday, touch everyday, smell everyday and, of course, sleep in everyday, is such an exhilarating experience for many Americans that, today, people here are willing to make offers on properties well above their asking prices! The situation has gotten so crazy that any listing in Los Angeles, Las Vegas or Phoenix today automatically commands multiple offers from potential buyers. Properties that hit the market get sold within the very first week and usually way above the original asking price. Indeed, real estate appraisers are completely stunned by what is happening to property values today. For example, it is very common in the west coast today to find properties appreciating in value by as much as $100,000 in one year, depending on location. What is also fueling the hot real estate market today is the relatively low interest rate environment the US economy has enjoyed for the last 3 years, where long-term rates for real estate loans have hovered around the 6% or below mark. Also, the liberalization in the capital gains tax laws here has contributed significantly to the continuing real estate boom. According to the tax laws, if you own a home in the US and have lived in it for at least two years, you can sell that home and pocket, tax-free, up to $250,000 ($500,000 for a married couple) of the profit on the sale! You can repeat this process over and over again on your next several home purchases, no questions asked!
HOW DOES ALL THIS AFFECT GHANA? Anyone driving the Accra-Tema motorway today must be wondering where all the money is coming from to build or buy all the new homes in East Legon and its environs. Dzorwulu, Airport Residential Area, Adenta, Tema and all the other vicinities in the Accra-Tema metropolis are all experiencing their own mini real estate booms. Where is all this money coming from? You guessed right! Mostly from Ghanaians in Canada, Europe and, of course, the US. Savvy Ghanaians abroad are cashing out the equities in their homes abroad to build or buy homes in Ghana. This trend is helping not only to alleviate the cash-crunch facing real estate developers in Ghana but also creating locally a cottage industry of housing-related activities that provide jobs for all manner of contractors-------from roofing to electrical, air conditioning and refrigeration,, masonry, carpentry, interior decorating and even swimming pool and security gate contractors. Money inflows from Ghanaians abroad have become a major source of foreign exchange for the Ghanaian economy, according to the Central Bank of Ghana.
If the present trend in the US real estate market continues, Ghana will remain the ultimate beneficiary as Ghanaians abroad continue to cash in on the US real estate boom. Ghanaians at home are already seeing evidence of this trend as newly-built executive homes in the airport area, Dzorwulu, Ridge or Abelemkpe are quickly snapped up for rental by embassies and companies arriving to do business in Ghana.
A relationship between Ghana and the US real estate market? Our world is truly becoming one huge global village, indeed!

Peter Tsikata
Los Angeles, California.

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