In fact, the real estate market returned to its previous indicators in just five months. The opinion of experts that prices will reach their minimum in 2020 and the predicted “freeze” of the market did not happen. Let’s see who is winning now: the seller or the buyer? And why, despite the rise in prices, the demand for their own housing does not fall.
What is going on the USA real estate market?
Statistics show inexorably that now is the best time for real estate sellers in recent years. Mortgage rates of about 3% make apartments and houses available to more buyers. When if not now to invest in your own home? At the same time, stocks of finished and under construction housing are running out. Compared to last year, the number of offers decreased by 39%. And this pushes people to buy even more.
Thanks to such a trend, house prices are reaching record levels. According to the latest data, in September, the value of residential real estate increased by 11.1% to about $ 350,000.
As for the buyers, from this side, too, not everything is so bad. Yes, prices are rising, but due to many local programs and low mortgage rates, in the end, the cost of apartments for them remains at the level before the pandemic.
The number of transactions, as well as the speed of their closing, have noticeably increased not only in comparison with the period of “pandemic” calm, but also in comparison with last year’s indicators. This is caused by the same lack of real estate stocks, so if someone wants to buy a house of dreams, rather than choose from the fact that there is, we have to hurry.
Today, most buyers choose houses and apartments for their own use. Few people buy housing for subsequent renting. The fact is that if before the pandemic the rental rate had a high dynamics, now the price increase, if there is, is by tenths of a percent. In general, in the United States, the average rental price in August was $ 1,771, which is 0.3% less than in the previous month. And this is the largest decline since September 2017. A further drop in rental prices is also predicted — thus tenants are trying to attract new customers.
Based on the statistics, we can say with confidence that house prices will continue to rise until the end of the year. This is due to high consumer competition and a small number of offers.
The first record of rising prices for secondary housing was recorded in June 2020. The median home value was $ 304,100, an 8.5% increase over last year ($ 280,400). In August, when demand for real estate usually falls, which entails a slight decrease in the price level, in 2020 the price increased by 11.4% compared to 2019 and amounted to $ 310,600 per house. As mentioned above, September showed another notable increase.
The rise in prices and the reduction in offers entail a significant reduction in the time for closing the deal. On average, the purchase period was reduced by 13 days. In each state retained its period, but increased closing speed is absolutely at all.
The forecast for the housing market until the end of 2020.
The demand for housing is growing, but whether it will be so next month or by the end of the year is unknown. Today, the situation with the employment of the population is actively recovering, but nevertheless, banks note a steady percentage of overdue mortgage payments (about 7% as of October 1, 2020). The delay in rental payments, although it does not have a sharp increase, but the number of tenants who could not pay the payment on time, increased by 1.5% .
Rumors about a second wave of the pandemic, on the one hand, are pushing buyers to acquire their own comfortable housing, on the other hand, they inspire uncertainty about the future and the ability to pay the bills.
Experts say property prices will rise another 1.2% by November 2020 and 4.8% by the end of summer 2021.
Summing up, we can say that today each player in the real estate market has its own advantages:
· buyers are interested in low mortgage rates, federal and regional programs for deferred payments in case of changes in solvency
· sellers have a demand for their properties at high prices
· investors want to invest in rental housing in order to get good returns in the long term.
Dmitry Tsyplakov, CPO of FinCase.