US residential real estate: 2016/17 trends
What is the current property picture for international assignees moving to the US, and for domestic relocatees? Corporate relocation services provider Cartus gives Relocate readers the inside track.
See more features about the US in the Autumn 2016 issue of Relocate magazine on our Digital Issues page.
- Affordability concerns – Existing home prices continued to rise through June, negatively affecting demand, leading to a slowdown in sales. Economists predict a continued cooling down of demand into the second half of 2016
- Inventory shortages – 2015 was the fourth consecutive year that inventories held below the six-month level, the conventional measure of a balanced market. Currently at 4.7 months, housing inventory remains below that six-month level
- Robust jobs growth – Employers hired an additional 255,000 people in July, marking the second consecutive month of robust hiring and rising wages. At 4.9 per cent, the jobless rate has fallen by more than half since exceeding 10 per cent in October 2009
- Falling mortgage rates – The average interest rate on all mortgage loans was 3.63 in July, down from 3.7 in June, as markets assessed the impact of Brexit
- Home ownership landscape – The US home ownership rate fell to its lowest level since 1965, due to house-price increases, low inventory, and lagging income growth. Boomerang buyers (those coming back to the market after foreclosures or short sales), and Millennials moving from renting to buying, could help boost the housing market drastically
- Hope for underwater homeowners – Despite the negative aspects of rising home prices, including slowed sales, the price increase does provide hope to ‘seriously underwater’ homeowners, as it lifts all home equity. The increase in home equity also reflects declining numbers of distressed borrowers and increased principal repayment
What are we at Cartus expecting in the US real-estate market for the rest of this year and into the next?
- New construction starts will remain slow – July housing starts were at a seasonally adjusted annual rate of 1.211 million, still below the 1.5 million needed to get supply back in line with demand
- Impact of Brexit – The United Kingdom’s vote to leave the European Union may have an impact on US mortgage rates, pushing them to all-time lows. Treasury rates, which serve as a benchmark for mortgage rates, were pushed to new lows because of the decision. The low rates could be an incentive in demand for homes, as well as loan refinancing