House prices have soared dramatically in the United States over the last two years. The average house prices in the US have climbed by 34.4 percent in the last two years, according to Fortune.
This growth is wonderful news for property owners wanting to sell, but it makes it extremely difficult for people to get on the housing ladder. Property prices have escalated to the point where they are no longer affordable since the average incomes have not increased at the same rate demonstrating how real estate values have become unrelated to economic fundamentals.
This has led to many wondering if this implies that the housing market will crash again, as it did in 2008. Prices have risen by 14% over the last year, which is greater than it was during the run-up to the 2008 financial crisis. House prices growing at this rate is concerning because it mirrors what occurred prior to the 2008 housing market crash.
Nevertheless, unlike in 2008, there does not appear to be unrestrained lending. Long-term mortgages have been rising in tandem with the housing market, with a 5% rise alone in 2022. As a result, many analysts are less concerned about the market’s health.
The Sunbelt in the US has experienced the largest rise in property prices, however, is now experiencing a strong cooling off. Miami was rated to be 27% overpriced. Moreover, Austin became a popular location during the pandemic. Tesla as well as other large companies moved their headquarters here. Also, Covid increased people’s desire to have a larger property and Austin offers affordable properties with space. However, the price rise of 28% from April 2021 to 2022 has meant that this is no longer the case and transactions here have begun to slow.
A cool-off in the US housing market is beginning to be seen. A key reason for this is that interest rates have been rising as a consequence of the central bank’s efforts to reduce inflation. Additionally, investors are less interested in purchasing properties in the US at this time due to the astronomical prices. Increasing interest rates and general economic conditions have meant that the US is an unattractive place to buy real estate at the moment. Once the market has cooled off new opportunities may arise. But at this moment it is recommended to look elsewhere.