From the aftereffects of the pandemic to the status of new builds, here, we offer an overview of the USA property market.
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Will the USA property market continue to grow?
A look at the USA property market.
In the last few years, the property market in the USA (and really, across the globe) has seen some interesting trends. Home values experienced rapid growth during the pandemic. Following that, for a while, the total number of house sales was shrinking month by month in the USA. This lead many to fear that there would be a recession, but it appears that this was more of a correction, as the property market returned from the dizzying heights of pandemic growth and is now seeing calmer levels of growth.
Property specialists are divided on whether they expect prices to increase or decrease, however, the universal feeling seems to be that changes in the property market will not be as extreme as they have been in the last couple of years. This might make your property purchasing plans feel less like a game of chance.
Increasing demand for affordable housing
Millennials are beginning to search for their first home. Many have had these plans delayed by the pandemic. But there is a significant lack of affordable housing, this is driving up the demand for housing. Moreover, the property market is increasingly becoming an investor’s game. In 2010, only 10% of property was purchased by investors, as of last year, its closer to 20%, according to data by Redfin.
The aftereffects of the pandemic
During the pandemic, interest rates hit a record low in the USA. Since then, according to data from Freddie Mac, mortgage rates have hit a new high at 6.5%. This has meant that many people are choosing to stay in their homes rather than look for a new one. Instead, many people are opting to renovate their homes. In a report by the Real Estate Witch, 95% of homeowners said that they planned to make major improvements to their property, though only 50% could afford them at the moment.
The rise of digital viewings
While an in-person viewing trip is essential, there’s now more opportunity to scroll through online.
One bonus aftereffect of the pandemic for international buyers is the rise in digital viewings. We always recommend that you book a trip to Florida or San Francisco to see properties in-person and get a real feel for the area and see if homeowning there would truly suit you. However, the rise in digital viewings can make property hunting for a home in Miami from Brighton easier. It shortens the gap between an interested buyer who needs to book a flight to see a home and an interested buyer who just needs to drive half an hour to see a home.
Interest beyond the city
Another consequence of the pandemic is that people are starting to value city living less. The rise of remote and hybrid work means that people no longer need a stress-free commute into work. Instead, they value bigger space and more greenery. As the remote and hybrid working looks like it is here to stay, it is thought that this trend towards suburbia will grow too, though it’s not yet quantifiable how this will continue to impact the USA property market.
New home sales are growing
Dallas saw significant growth in new build home sales.
Property specialists Zonda track 65% of the production of the new home market in the USA. Their data shows that despite issues with housing affordability and mortgage rates, the new home market continues to grow. In April, on a seasonally adjusted basis, new home sales were up 5.4% from the month before, and 8% from a year ago.
Moreover, the markets with the best improvements from last year were Dallas (+28.4%), Salt Lake City (+25.1%) and Raleigh (+15.8%). While the worst performing were New York (-26.1%), Denver (-26.1%) and Phoenix (-16.6%).
A look at the exchange rate
With any property purchase in the USA, your budget for your new home is going to be subject to fluctuations in the currency market. Currencies move every day, and they can move against you. Currently, it is a good time for UK property buyers to look into purchasing overseas. The pound is higher than its October 2022 lows and close to two months highs.
To protect your property budget against changes in the property market, we recommend that you reach out to currency specialists, Smart Currency Exchange. They can organise a Forward Contract for you which allows you to lock in an exchange rate for up to twelve months, giving you time to complete your property purchase. Plus, they can keep on top of what the exchange rate is doing for you. While both property markets and currency markets are unpredictable and even the experts can’t be sure of what will happen next, you can at least have some reassurance in your own financial planning with a Forward Contract.
