The US real estate industry is “strongly confident” about the outlook for market conditions over the next six months. Optimism levels soar for sales of single family homes in Florida and Texas, and price rises for property throughout the country are expected to be at 3.6 per cent over the coming year.
Results from the latest Realtors Confidence Index, published by the National Association of Realtors (NAR), show inspiring market conditions for US property. The over 50,000 real estate professionals surveyed for the report claim to be “strongly confident” in the current situation as well as the short-term scenario.
These high confidence levels are based on three main pillars. The first is the buoyant employment market in the US, currently creating a consistent 220,000 jobs a month and encouraging people to buy homes. Lower mortgage insurance premium rates have also influenced the US property market along with the new down payment of just 3 per cent required for properties bought with mortgages backed by Fannie Mae and Freddie Mac.
Single family homes in the US inspire the most confidence among realtors and they expect sales of this type of property to be particularly strong in Florida and Texas. Confidence levels in these two states exceed 75 per cent among local agents. Sales of townhouses and condos in Florida and Texas have confidence levels of between 50 and 75 per cent.
In terms of prices for US property, the Realtors Confidence Index reports that the median price nationally (for all property types) was US$219,400 in April this year, 9 per cent higher than the Index for the same month last year. The Index points out that despite this price hike, US property still costs less than its peak price of US$224,408 reached in July 2006.
Realtors generally predict price increases of 3.6 per cent for the next year, although in several US states, expectations are higher. Realtors in Florida, for example, are confident that prices for property in the Sunshine State will increase by over 5 per cent by May next year. Along with Oregon and Colorado, this is highest predicted price rise in the country. Property in Texas is also expected to rise above the national forecast with a 4 per cent rise on the cards, according to local agents.
US property agents express concern over the lack of inventory and the Index reports “a severe inventory shortage, especially for properties in the lower price range and for those that are move-in ready”. The national average for time spent unsold on the market stood at 40 days in May, although for nearly half the states including Texas, property was sold in under a month.
The Index finds that first-time buyers are returning en masse to the US property market. They represented 32 per cent of the market share in May this year, compared to 27 per cent a year earlier. Single family homes remain their preferred property purchase with 86 per cent of those under 35 opting for this type of home.
Although the Index focuses predominantly on sales, it dedicated a section of rental property in the US. 57 per cent of agents report a rise in monthly rental rates in their state, up from 53 per cent a year ago. NAR believes this indicates “continued strong demand for rental properties” and notes that the number of people renting property “remains elevated”. Possible reasons for this include a lifestyle choice and financial constraints among younger households.
Source: National Association of Realtors