Spring usually sees the busiest time in the property year and the US market is no exception. As the country’s economy moves firmly forward and creates employment opportunities, US property follows suit. Activity levels are so high in some parts of the US that some experts are predicting the best spring since pre-crisis years because of these five trends.
More sales at higher prices
Signs of a fully recovered property market can be seen in the soaring figures for completed sales. Realtor.com forecasts sales to rise by 8 per cent this year generally in the US and the Mortgage Bankers Association expects sales of new homes to go by up 13 per cent. However, recent statistics in some parts of the country suggest increases may be considerably higher. March figures for the Florida property market showed that completed sales for single family homes rose 25 per cent year-on-year. Sales of townhouses and condos in Florida went up by 13.4 per cent in the 12 months to March.
Along with more completed sales, house prices are also predicted to continue to rise. Realtor.com forecasts a 5 per cent increase across the board this year as does CoreLogic who also find property prices in 27 US states are currently within 10 per cent of their peak price. These states include Texas where in areas such as Dallas and Houston property prices are at record highs.
Sales might be rising, but house hunters will find themselves with less choice this spring. Realtor.com reports that US property inventory levels fell by 10.9 per cent in year to February and high activity in the market means supply is unlikely to rise. Florida registered a supply of just 5.1 months in March, down nearly 10 per cent in a year, although in some parts of the state such as Jacksonville, inventory levels improved slightly giving those looking for property more to choose from.
Higher mortgage rates
US mortgage interest rates are set to leave their low levels and rise this year. Analysts are divided on how much the rate will increase by and when, but consensus is pointing to a rise during this quarter. The 30-year fixed rate is predicted to go up to 4 per cent by the end of June and to 4.6 per cent by the close of 2015. This pending increase is expected to encourage many more buyers to the market to make the most of the current lower rates.
Mortgage interest rates are on the rise, but the good news for many would-be homeowners is that access to home loans is improving, albeit slowly. The Mortgage Bankers Association Index rose slightly in February to 118.6, showing that mortgages are easier to obtain. Mortgage analysts expect this tendency to continue over the next two years.
More luxury property sales
The market for luxury property in the US is also on the rise. The National Association of Realtors found that sales for properties priced in the US$750,000 to US$1 million bracket rose by 12.6 per cent in the year to February. The babyboomer generation and foreign investors are thought to be behind this trend, expected to continue as mortgage interest rates rise.
Sources: Florida Realtors, National Realtors Association