Property Boom in the US

The USA’s economy has been on a downward trend in terms of retail and reduced customer spending but the property market has continued to make huge strides. These are wonderful news for a country that requires a deliberate effort to return to its knees economically.

According to the National Association of Home Builders, the building sentiment reached its peak in October last year which marks the hugest 10-month improvement in almost a decade. The property market has been doing so well that it’s easy to ignore how bad the economy is doing.

The association noted a decrease in the number of individual house building permits in September compared to the previous month but were quick to point out that it could be due to a slowdown in uptake of apartment units as opposed to traditional houses.

The future is bright when it comes to the property market in the US. According to the Federal Reserve, which researches the property hotspots throughout the country, Boston, Atlanta, Richmond, Chicago, Kansas City, and San Francisco have ready property markets.

Mortgages could go lower

Reports show that wages have increased significantly and unemployment is at an all-time low in the past few years. What this means is that house buyers have a higher buying power and are willing to take a mortgage to purchase their dream houses.

Low mortgage rates act as a recipe for young people to begin their homeownership journey. Mortgage rates could go even lower if the Federal Reserve continues to reduce interest rates.

House Flipping Phenomenon

This is the practice of living in a house for a certain period before leaving it to someone else for a higher price. The practice gained traction in the 2000s. All you needed to do is upgrade a few features of the house such as the kitchen and the property would fetch a higher price. House flipping was so common that in 2006, 1 out of 10 houses in the US WAS brought to flip.

Fortunes change in 2008

2008 is one year that investors in real estate especially those who were engaged in house flipping would rather not remember. The housing market melted down and many investors lost thousands of dollars in investments. They were left holding on to properties that nobody wanted to buy yet they had invested to have those houses renovated. This went on to disapprove of the theory that US housing was a slum-dank and that investors couldn’t lose money.

Housing undersupply

Homebuilder stocks are doing well and if you’re looking to grow your money, consider homebuilder stocks. Barry, who is the CEO of MBS Highway, a leading real estate advisor spends most of his days speaking to the who’s who in the real estate market. In an interview with Forbes’s business reporter, Stephen, Barry stated that property prices are determined by supply and demand, and as it now stands, there is undersupply. The 2008 property dip put many investors out of business. Only a few were lucky to get back on their feet and invest again. In terms of numbers, over the last decade, fewer homes were built than in the 50s.

Data from the Census Bureau indicates that an average of 1.5 million homes were built annually since 1959. Compare that with 900,000 homes are built annually since 2009.

The tides have begun to change

According to Barry, home buyers are about to flood the market and the wave has begun to shift. Millennials make up the largest group of the population. The median age of millennials is 34 and studies have shown that the average home buyer owns their first home when they are 33. Millennials have begun buying houses. According to data from the National Association of Realtors, one in three individuals buying a house is a millennial.

Barry compared the property market to a rollercoaster train which becomes slow when the first train cars go over the bump but after that, it picks up speed. The first batch of millennial bought their homes a year or two ago and it’s expected that every other year from now, tens of millions of millennials will flood the housing market. When that happens, the property market will skyrocket and the housing boom will continue on an upward trend.

Who benefits?

Home-builders will be laughing all the way to the bank if the boom continues and it’s showing no signs of slowing down. In the last decade, homebuilders have been cautious about putting a lot of investment in the property market but they have gone back to work. Over the past few months, new home statistics have reached a peak since May of 2007. The property markets’ future is bright.