A lot has happened in the United States this June. Politically, the Presidential race seems more or less decided, with Hillary Clinton well ahead of Donald Trump in the opinion polls. What about the property market?
Experts believe that spring is the best time of the year for the housing market in the US. That’s regardless of whether you are buying or selling. Some of the trends in the residential property market have become very noticeable, such as homes are no longer as affordable as they were over the past 12-18 months.
Indeed, home prices across the U.S. have risen much faster than wages in 2016. This means the average American still finds it hard to afford a home in the country. It is worrying because prices are going up and a lot of buyers have been left out in the cold.
Even so, despite the fact that home prices are on the up, there’s never been a better time to buy a house in the U.S. Indeed, buying a home makes much better sense than renting one. Rents have gotten very high over the last couple years. You are likely to save much more money over the long-term by buying a house rather than living in a rented accommodation.
Mortgages in the U.S. are much easier to get than in the past. Banks and financial institutions in the U.S. have relaxed their underwriting standards. Lending standards were made strict as a reaction to the 2007 subprime mortgage crisis. But now, since the housing market is healthy again and there’s no risk of a real estate bubble in the U.S., banks are more willing to approve loan applications than before.
Another major change is that small-time investors are getting into the real estate market in the U.S. for the first time since 2007. It is no longer just the major financial institutions or hedge funds that are investing in real estate development. Today, more small investors are buying single-family homes and vacation rentals than before, for the purpose of investment.
What has become evident is that the all-cash buyer is no longer the force that they were since the 2008 recession. All cash purchases have now fallen to 25 percent of the sales, which is how they always were in the country.
Also, the inventory in U.S has never been as tight in the recent past as it is today. The demand is much higher than the supply, as there are no longer that many foreclosed homes that are coming into the market. In fact, there is a huge demand on builders to come up with new single-family homes.
Interestingly, there is a major demand for townhouses in the U.S. today. Many first-time buyers prefer to stay at townhouses as they are smaller than an average home, offer high-density housing, are energy efficient and modern.
What is clear is that both home buyers and sellers are more confident about the US economy than they have been for a while yet. They are no longer scared by the prospect of rising interest rates. Since the Fed has been raising interest rates very gradually over the past 12-18 months, there is no shock factor as such for buyers.
As Ralph McLaughlin, chief economist at Trulia says, “In most markets, rates would have to double in order to wash out the benefits of home ownership, and that’s just not going to happen anytime soon.”
What of the hottest real estate markets in the U.S. such as San Francisco and Boston? Well, it seems that they are slowing down. There’s no fear of a bubble most of the homes are bought with cash or with carefully vetted loans. So, generally, as we approach Spring, the U.S. housing market is in a very reasonable state, indeed. This is good news for both buyers and sellers of US property.