What is the development trend of real estate in the United States?

(1) The market continues to recover and housing prices continue to rise

According to Chinese people's habits, the first question when buying a house is whether housing prices will rise, and the answer is "yes."

In 30 reports, almost all institutions believe that U.S. housing prices will continue to rise in 2017.

According to data from Zillow, the largest real estate platform in the United States, U.S. housing prices increased by 4.8% in 2016, and it is predicted that housing prices will increase by 3.6% in 2017.

Corelogic, the world's largest real estate data provider, is more optimistic. It predicts that house prices will increase by another 5.2% in September 2017.

The picture below is a Zillow survey of more than 110 economists and real estate experts, predicting U.S. housing prices from 2016 to 2021. The red dotted line is a pessimistic forecast, which believes that U.S. housing prices will rise by 10.2% in the next 5 years; the green dotted line is an optimistic forecast, which believes that housing prices will rise by 30.8% in the next 5 years; the black dotted line between the two refers to the average forecast, which is believed to be 30.8% in the next 5 years. , U.S. house prices will rise by 21.4.

Even with pessimistic predictions, U.S. housing prices will reach the highest point before the 2007 financial crisis this year. Is there still room for housing prices to rise?

Don’t be fooled by superficial numbers. CBS business analyst Schlesinger believes that if inflation is taken into account, a house that cost $200,000 10 years ago would cost $276,000 today.

This view can be verified by the figure below. The chart below shows the median price of existing homes in the United States. The blue line is the nominal price over the years, and the red line is the housing price after adjusting for the inflation level in 2016. It can be seen that the housing price in 2007 was significantly higher than the level in 2016, so the U.S. housing price is actually close to the pre-crisis level. The high level is still far away, and major institutions believe that there is still room for growth in 2017.

(2) It is easier to obtain a home mortgage loan

Another major change in 2017 is that home purchase loans will be relaxed, and more people will be able to meet the home purchase threshold. American real estate website Redfin believes that Fannie Mae and Freddie Mac will increase the loan cap in 2017, allowing buyers to use more leverage to buy higher-priced homes.

The American Mortgage Bankers Association's Credit Availability Index is an authoritative indicator of the ease of obtaining a mortgage loan. The higher the index, the easier it is to obtain a loan, and vice versa.

In November 2016, the index reached an eight-year high of 174.1, entering a period when it is easiest to obtain mortgage loans, and many large financial institutions are more willing to provide home mortgage loans to borrowers

Of course, it is also a big plus for foreign buyers. Currently, some countries restrict foreigners from buying loans, but the United States has opened the door to mortgage loans, which is undoubtedly more conducive to investor financing.

(3) Mortgage interest rates will increase slightly, and monthly payments will increase

Many institutions including NAR, Zillow, MBA, etc. believe that the 30-year mortgage loan in 2017 will Fixed-rate mortgage rates will remain at 4.5-5, which is higher than the sub-4 mark over the past five years. This means that if you buy a property, your monthly payment may increase by more than $100.

However, the impact of rising mortgage interest rates may be like a "drizzle". First, economic conditions have improved compared to a few years ago. Compared with 2013, there are 7 million more jobs in the United States, and wage growth is showing signs of accelerating; second, the amount of mortgage loans has expanded, making it easier to obtain a home loan.

As a result, mortgage interest rates have risen slightly, which is difficult to quell the demand for housing.

(4) House transactions are active and liquidity is enhanced

According to Redfin statistics, houses for sale stayed on the market for only 52 days in 2016, which was the longest period since 2009. record, and believes that this record will be broken in 2017.

The red line in the figure below indicates that the entire home buying process from the beginning of the search to the completion of the transaction takes an average of 83 days, 7 days less than the same period last year; the blue line indicates the date on the market for sale, which is 52 days. Both curves are trending downward, indicating that housing liquidity is also increasing and will be better in 2017.

In addition to market sentiment, industry innovation is also one of the reasons for the increased liquidity of housing. More and more buyers are interested in the online offer process, making transactions faster.

(5) The Surban movement is in full swing in the United States

If you read the forecasts of major American institutions, you will definitely find a new word "Surban". The word comes from suburb (suburb) and urban (city), and refers to the direct development of the suburban (satellite city) center in the suburbs of the city, the improvement of supporting facilities for urban functions, and the construction of housing and communities in the suburban city center.

In the future, the United States will develop more residential communities in suburban areas and close to bus stations. This plan is also consistent with Trump's infrastructure plan to promote the development of suburbs and satellite cities. Suburbs will add more urban amenities, allowing residents to live, work and play outside the core of the city.

The Surban lifestyle allows people to enjoy the convenience of urban life through convenient transportation (near bus stations), and benefit from better living conditions in the suburbs at lower prices. Consulting firm John Burns predicts that nearly 80% of residential growth will occur in suburbs over the next decade. Between 2010 and 2015, 71% of new residential growth will come from suburbs, while urban areas will see only 15% of residential growth by 2025.

(6) Housing supply increases, but inventory remains tight

In recent years, the number of housing starts in the United States has continued to increase. One is to respond to residential demand, and the other is the National Association of Home Builders (NAHB) The builders' perception index shows that builders' confidence has returned to the high point 11 years ago, and the number of new homes started in the United States has also increased year by year.

AR said that although the number of houses under construction has increased, the number of starts is still only 60% of the normal rate, and the housing inventory will remain tight in 2017. Total housing inventory at the end of September 2016 increased by 1.5%, with 2.04 million existing homes for sale, but was still 7% lower than the same period last year.

NAR believes that new home sales will increase by 10% in 2017. The sales of 5.42 million units in 2016 was a new high in the past 10 years. Second-hand home sales will increase by 2, from 5.36 million units to 5.46 million units, which will be the best sales since 2006 (6.47 million units). In 2018, they will increase by 4 units, reaching 5.69 million units.

Even though housing starts will continue to increase, sales will remain strong and tight inventory will remain the norm, which will continue to push up housing prices. Sam Khater, deputy chief economist at CoreLogic, believes that the main reason why housing prices continue to rise is limited supply and strong demand.

(7) Construction costs continue to rise, which may further push up new home prices

In 2016, the United States suffered from a shortage of construction workers. According to data from the National Association of Home Builders (NAHB) , there are currently about 200,000 job openings in the construction industry. Professional organizations including Total Mortgage, Zillow, NAHB, etc. all believe that the shortage of construction workers will continue in 2017.

In this case, the builder has to pay higher wages to the construction workers, which increases the labor cost. It is conceivable that the resulting cost increases will be passed on to buyers or investors.

You may think of Trump’s harsh immigration policies. If he strictly implements his campaign manifesto of driving away illegal immigrants, it may lead to a large shortage of construction workers in the short term and further increase the cost of housing construction.

(8) The increase in rental income has slowed down

Many institutions pointed out that the supply and demand for rental housing will gradually reach a balance, and the U.S. home ownership rate has recently reached an inflection point, and more people will own own housing, so rent growth will slow down.

The Urban Land Institute of the United States pointed out that the growth rate of apartment rentals will slow down year by year in the next three years, with the growth rates from 2016 to 2018 being 3.5, 3.0, and 2.9 respectively.

Demand for apartment rentals has slowed, resulting in lower rent increases.

According to Zillow forecasts, while rents will continue to grow in most major cities in 2017, the growth rate will be only 1.7, which is comparable to the growth rate in 2016.

While many places have seen double-digit rent growth over the past few years, recent modest rent growth suggests builders are building more apartments, allowing the supply of rental housing to catch up with demand to accommodate The housing needs of nearly 40% of Americans who choose to rent.

(9) Millennials will become homeowners, increasing the home ownership rate.

Surprisingly, almost 80% of the reports mentioned that "Millennials" (born between 1982 and 2000) will become a force that cannot be ignored in the real estate market in 2017. More first-time home buyers will also boost the real estate market and push up housing prices.

On the one hand, the proportion of this generation living with their parents has reached 40, the highest level in 75 years; on the other hand, the older people among them are gradually reaching the age of 32 - the average first-time home buyer in the United States. age.

Although a high proportion of them live with their parents, which suppresses the demand for home purchases in the short term, it can also spur a large demand for first-time home buyers in the short term. Because the "millennial generation" advocates independence and freedom, living with their parents for a short period of time is just a transition. Eventually, they will buy a house and live independently.

According to NAR statistics, 15 million young people in the United States now live with their parents, compared with only 10 million ten years ago. In 2016, 61% of the first-time buyers were young people under the age of 35. This group of potential homebuyers, the “millennial generation”, will gradually explode in 2017.

(10) Real estate agency commissions will continue to decline

When buying and selling houses in Western countries, they must go through intermediaries and brokers, so commissions have become an unavoidable part of investment. It is an expense, and its change directly means the level of the fixed cost of buying a house.

As alternatives to real estate brokerage become more common, people may be paying less in commissions in 2017 and beyond. A 2016 Redfin survey showed that most sellers paid their agents less in commissions, and similarly, almost half of buyers also received commission discounts. This is a significant increase from 2015, when only 37 buyers received commission discounts of more than $500.

More and more innovative companies are emerging that offer cheaper ways to buy and sell homes, and more consumers are adopting these money-saving methods. If not, you can continue to buy and sell houses through traditional brokerage services, but investors should negotiate more about the commissions paid.