The current state of America’s housing market raises many questions. The population and investors are concerned about the real estate market. In recent months, the housing market in the US has evolved. At the beginning of the year, conditions were more favorable for buyers then now. Recently, the situation has changed. After analysis, we deducted 3 main points about the housing market in the US.
First Trend: The general housing price growth
In one year, the average house price has grown by 10%. According to where you live, the variation is more and less noticeable. In many US cities, we can notice a light increase. However, four cities stand out: Miami, Los Angeles, San Francisco and Boston. These places have the fastest-growing prices.
At the beginning of the year, prices were attractive for potential buyers because banks supported the growth thanks to appealing conditions. This situation was suitable for the short term but not for the long term. Progressively, the banks have stopped supporting the market, which has led to the current situation.
Second Trend: The difficulty of obtaining a loan
Mortgage rates have almost doubled since 2021. The type of property that a qualified worker can afford has changed. Due to this rise, living in the city is less affordable than living in the countryside. For the moment, conditions are less attractive for borrowers. The borrowing costs have exceeded the buy-to-let return on investment. In that case, potential buyers are more unwilling to borrow. It is still possible to borrow, nevertheless, the time to get money back is less appealing.
Why are interest rates so high? In order to combat elevated inflation, the Federal Reserve policy has increased the rates to compensate.
Third Trend: A significant increase in rent
Rental prices continue to increase in U.S cities. This surge is due to the increase in demand. Since the pandemic, we can notice strong income growth and household formation. This situation led to a boost in demand. For example, Boston has benefited from the highest income growth.
In light of this expansion, landlords progressively raised the price to respond to this demand. The rental price is increased as fast as the purchase price. Nevertheless, even if people are willing to rent, actual prices scare potential tenants. In addition, the rise in mortgage rates still represents a brake for interested people.
To talk about Miami, the rental price has doubled compared to before the pandemic. Indeed, this growth is similar to the evolution of other U.S cities.