Increasing mortgage rates and growing employment opportunities are fuelling the US property market where prices surged practically across the country in Q2 this year. Demand at levels not seen since before the economic crisis has pushed supply levels down to just over 5 months, putting further pressure on the already high demand market for US rental properties.
The latest quarterly report from the National Association of Realtors (NAR) shows that the vast majority of metro areas in the US saw high house rises. In the report for Q2 this year, 93 per cent of markets experienced a hike in price rises compared to the same quarter in 2014. Prices in 19 per cent of these areas increased by double-digits.
Regional and Florida prices
According to NAR, the median price for a single family home in the US reached US$229,400 in the second quarter of this year, 8.2 per cent higher than Q2 2014. In the condo market price rises were more moderate – 3.1 per cent higher than Q2 last year bringing the median price to US$217,400.
In regional terms, the highest price hikes were seen in the West and Midwest where single family homes went up by 9.6 per cent and 8.7 per cent respectively. The most expensive markets for property in the US are found in San Jose and San Francisco, both in California. Here, a single family home averages at US$980,000 and US$841,600. At the other extreme, Cumberland in Maryland and Youngstown in Ohio have the cheapest single family homes in the US. In these metro areas, median prices come in at US$82,400 and US$85,000.
Prices for Florida properties rose higher than the national average with several districts experiencing double-digit rises. In the 12 months to June this year, median prices for single family homes rose by 12.5 per cent in the Sarasota-Bradenton-Venice metro district, by 12.2 per cent in Tampa-St Petersburg-Clearwater and by 12 per cent in Deltona-Daytona. Increases were lower in Orlando and Jacksonville, although still high at 8.8 per cent and 10.3 per cent respectively.
High sales levels
Sales were brisk across the US property market in the second quarter. Some 5.3 million single family homes and condos were sold throughout the country from April to June, 8.5 per cent higher than the same period last year. NAR’s Chief Economist Lawrence Yun attributes the rise in sales to “steady rent increases, the slow rise in mortgage rates and stronger job markets” and points out that it’s “a boost in sales paces not seen since before the downturn”.
Brisk sales have inevitably put pressure on the supply within the US property market and despite higher prices there still isn’t enough on the market to meet demand. NAR reports that in Q2 this year there were 2.3 million properties on the market, translating to a supply of 5.1 months, down from 5.5 months a year ago. Experts generally concur that 6 months’ supply indicates a balanced market.
NAR President Chris Polychron said that realtors throughout the US were reporting a hot market for sellers with many incidences of bidding wars among potential buyers. He described current market conditions “strong competition and limited days on the market for available homes, especially at the entry-level price range”.
Source: National Association of Realtors