”The selling price of houses in all districts has increased significantly, more than 20%.” said Huifeng, a real estate company in Rockville County, Maryland, USA. She has 7 years of experience in real estate sales, but the sustained and substantial increase in housing prices is something she has almost never experienced in her career.
Yu Huifeng remembers that a house she recently dealt with was listed for US$985,000. After bidding by buyers, the final transaction price reached US$1.28 million. “How much do you add?” It
is located in Sacramento, the capital of California. The Chinese Crystal has similar feelings. She started preparing to buy a house in the winter of 2020 and witnessed the soaring transaction prices in the local real estate market. “When I looked at the house last winter,” Crystal remembers, “The transaction price of a house was also $40,000 to $50,000 higher than the listed price.” After the Lunar New Year, when she and her husband started to inspect the house, “the transaction price was Generally, it is 100,000 to 150,000 US dollars higher than the listed price.”
The trend of rising housing prices is sweeping across the United States. In May, house prices across the United States increased by 15% year-on-year, the highest rate in 30 years—renewing the 14.6% annual growth rate reported in April. The latest data released by the National Association of Realtors show that in June this year, the median sales of existing homes in the United States exceeded $360,000, a record high.
Looking at housing prices from a macro perspective, behind it is the result of the US Treasury Department’s “draft” to revitalize the economy: US mortgage interest rates are at a historically low level. At the same time, inflation is increasing. According to data from the US Department of Labor, the US CPI (Consumer Price Index) increased by 5.4% year-on-year in June, a record high since 2008.
Many Americans who have experienced the epidemic have a similar mentality—a house is indispensable. Once the house is equated with a stable harbor, the battle for house robbing will be staged everywhere.
“Complete Seller’s Market”
Buying a house is the wish of the Crystal family since 2020. Her daughter is about to enter junior high school. She doesn’t want to cause her daughter to transfer to junior high school for three years because she didn’t choose a good house.
The plan was delayed due to the epidemic. When she recovered, housing prices in Sacramento, where she was located, had soared for several months. One of the major reasons is that since the epidemic, the innovation of working methods-working from home has become the norm for many companies. Crystal said: “The buyers around me now prefer single-family villas with four bedrooms and swimming pools.”
According to data from the US home-buying website REALTOR, among the top 20 metropolitan areas with annual growth rates, California cities including Sacramento, It took up 6 seats. This is mainly driven by the population spillover in Silicon Valley. After the outbreak, many technology companies, such as Google and Twitter, announced telecommuting and set this as a long-term company system. The home office model has boosted housing prices in cities around Silicon Valley—people who don’t have to commute can choose to live in areas farther away from the company.
Crystal’s personal experience is that there are only tens of thousands of people in the community, but this year many out-of-towners have bid for houses, most of which are employees of Silicon Valley technology companies. An expert analysis from Zillow, an authoritative US real estate database website: “We call it a great reshuffle. Home office has changed people’s inertia towards traditional residences.”
Since February this year, Crystal has taken a fancy to three houses, but All were frustrated because of the upsell of other buyers. Until April of this year, through the real estate agency she knew, she avoided bidding with other buyers, and finally won a single-family villa with a total price of 850,000 US dollars.
”Now we are in a complete seller’s market.” She recalled to reporters from the world that buyers spend most of their inspections on weekends, while intermediaries require prospective buyers to submit legally valid offers before Monday afternoon. Bid.
”The house will be gone when the offer is late,” Crystal said. “It is equivalent to seeing the house for 10 minutes. Without too much time to consider, you have to decide whether to sell.” Crystal remembers that there is a property in Los Angeles, and 77 were received. Intention offer.
The home office model has driven housing prices in cities around Silicon Valley.
Buildings in Silicon Valley, U.S.
These offers mean the psychological price of buyers. After receiving the offer, the homeowner will conduct a second round of screening, put forward specific conditions again among suitable buyers, and firmly grasp the initiative in their own hands. Crystal’s experience is that buyers with cash on hand are now the most popular with homeowners.
Yu Huifeng, who lives in the northeastern United States, said that since April and May 2020, Maryland housing prices have increased significantly, but the increase has not been suspended as the epidemic is brought under control. “Many houses are listed for sale this year, (sellers) asking prices are very low, but the final transaction price is beyond our imagination.”
Rush into the market at a historical low
”Buy even if it rises!” Crystal said categorically when asked why he insisted on buying a house this year. She has her own prediction: “In the next two to three years, US housing prices will definitely rise.”
Crystal’s psychological expectations represent the mentality of most home buyers in the United States. The epidemic forced the Fed to implement loose monetary policies in order to restore the economy, causing housing loan interest rates to drop to historical lows. At present, the 30-year loan interest rate in the United States has fallen below 3%. In the first quarter of 2019, this figure was close to 4.5%.
During the period of economic “sweeping water”, all consumer goods and labor costs in the market are on the rise. Crystal’s intuitive feeling is that even the price of roast chicken that sells for $4.99 in the supermarket has gone up. The cost of digging a swimming pool in her new home has risen from US$60,000 to US$70,000 to US$100,000.
Beverly Hills, Los Angeles
After experiencing the epidemic, most residents are reluctant to sell their houses.
The house has become a relatively stable asset in the context of inflation. In real estate, Huifeng also believes that the most direct reason for the sharp rise in housing prices this year is the decline in interest rates. “The 30-year loan interest rate can be as low as 1.99%.”
Lower interest rates have attracted first-time buyers to join. Among the people Yu Huifeng has contacted, many renters have become real estate owners today. “The government provides benefits for this group-if their salary meets the required conditions, they will give a subsidy of $7,500. Moreover, the first-time homebuyer’s loan interest rate is lower than the average person.” She introduced.
Analysts from the international accounting firm PricewaterhouseCoopers have pointed out that the strength of the property market is being driven by first-time home buyers. They no longer wait and see and use the opportunity of historically low mortgage rates to enter the market.
Among the buyers in 2020, about two-thirds have made an offer for a house they haven’t seen in person.
The demand side is swelling, and another problem that haunts the US real estate market is that the supply has been drastically reduced. Observers compared the data in the mid-2000s and pointed out that in the real estate boom that year, the inventory of houses was very large, reaching a peak of 3.8 million units in 2007. The 2008 financial crisis pierced the real estate bubble, and since then, the number of new housing starts in the United States has dropped significantly. The American Urban Institute issued an “early warning” at the end of 2020: only 2.5 months are left in the supply of housing.
Crystal also has personal experience. In March of this year, a real estate agent with more than 20 years of experience told her that only 28 houses were for sale in the suburbs where she was located. In March of previous years, about 160 houses were released. The agent explained that after experiencing the epidemic, most residents are reluctant to sell their houses.
House remodeling America
The new crown epidemic has increased people’s demand for real estate and contributed to the boom in the market. At the same time, it has changed the population distribution of the United States and reshaped American society.
An obvious trend is that people’s enthusiasm for moving from big cities to suburbs has increased dramatically. According to US media statistics, in April this year, the increase in housing prices in suburban and less populated cities increased by 12% year-on-year, but the increase in housing prices in densely populated cities was 2%.
On February 5, 2021, programmer Davor is writing code and his wife is cooking
The cities with the fastest house price appreciation include Denver, Phoenix, San Diego, Seattle and Tampa. In contrast, the slowest appreciation of cities include Atlanta, Chicago, Minneapolis, New York, and San Francisco.
However, people’s unprecedented enthusiasm for real estate investment still cannot solve structural problems, and the gap between the rich and the poor will even widen. According to a report released by the American Urban Institute in 2021, if we continue to follow the same path, the housing ownership rate in the United States will drop to 62% in the next 20 years.
The agency pointed out that home ownership is the best way to create wealth. According to the US Census Bureau, the net worth of real estate owners is 80 times that of renters. The good news is that the skyrocketing property market has shown positive signs in the past two months—the shortage of housing stocks has improved.
The US Department of Commerce said in mid-July that the supply of new homes for sale in May increased by 15,000 to 330,000, an increase of 5.8% from a year ago. At the current sales rate, this means that there are 5.1 months of supply for new home inventory, which is higher than the 3.6 months in January this year.
It is worth noting that the booming housing market may trigger a series of financial risks. According to Bloomberg News, U.S. Treasury Secretary Yellen and Fed Chairman Powell recently discussed the current real estate risks in the United States with other regulatory agencies.
”This is terrible.” Former Treasury Secretary Summers said on July 2. He questioned the Fed’s order to continue buying mortgage-backed securities despite the skyrocketing housing prices. Many officials, including St. Louis Fed Chairman Brad, have expressed concern, unanimously that the Fed’s buying behavior will cause the housing market to overheat.
However, buying a house has reshaped American behavior. In order to buy a house early, young people who have no savings have to think of other ways. According to a survey, more than half of Americans who bought their first home in 2020 paid the down payment with the help of family members or friends.
You know, American parents and children originally liked to take care of each other and be financially independent of each other. Parents now have to take out “six wallets” to pay down payments for their children, which shows how important houses have become in the eyes of Americans who have suffered from the epidemic.
