Back in January – it seems like eons ago now – US housing stock was in short supply. It’s one reason why house prices in the US were still moving higher.
But the virus brought a re-think, seemingly.
House buyers retreated on a number of fronts. With fears not only about the economy but also about personal safety. On the surface you might have thought house prices would fall.
But here’s what’s been happening on the ground in the US.
It turns out it’s not only buyers retreating. Sellers have retreated as well.
Some remarkably interesting data was reported on Bloomberg, 21 May as the spring selling season begins in the US.
Bloomberg reported bidding wars emerging between potential buyers in the most sought after sector of residential housing; single family houses.
In a way this is what ‘should’ happen; with a shortage of supply before the lockdown and buyers taking advantage of mortgages with historic low interest rates. They’re finding the few remaining best locations are being bid up.
The ever-increasing sales prices motivate those vendors who withdrew their properties to relist them.
In addition, according to the Mortgage Bankers Association, mortgages are also on the rise. As reported in May, they’re up 6% in a week as the US emerges from lockdown.
US buyers can now access a 30-year standard mortgage at 3.41% at an 80% loan to value (LVR).
That means a 20% deposit to qualify. And that’s an important point.
If US banks believed a 30% fall in home values was on the cards, they would be tightening lending requirements.
Plus, US government backed mortgage suppliers Fannie Mae and Freddie Mac are allowing refinancing. This should provide more support for real estate and extend credit at historic lows.
The cycle suggested some sort of slowdown in 2020. But not a complete and extended real estate collapse. We’re mid cycle. The full cycle is 18.6 years.
And things are playing out, just as we forecast.
My colleague Cathy Stacey put together some fantastic research about it all for subscribers.
Few, if any in the world are doing this kind work. It centers around a key set of real estate based indicators.
This helps you pinpoint exactly where you are in the real estate cycle.
It’s world leading research you will only find at PSE. It tells you what lies ahead for the economy. And that we’re setting up for a cycle repeat.
You can know broadly what’s coming next for the economy. Once you know how the cycles play out. That information is pure gold.
And gives you the investment edge that can profit from now. Click HERE to find out more.
And your Property Share Market Economics team