The lack of homes for sale in the US is leading to a puzzling increasing demand from buyers and renters.
The National Association of Realtors (NAR) says it is surprised since the two sectors generally compete against each other, but they are currently growing in both areas.
That’s because house prices are low, coupled with low interest rates at an historic low, which makes buying real estate competitive.
In many places across the US, demand is now outstripping supply so many buyers are being forced to rent which in turn is forcing up rents.
This contradiction in the behaviour of the real estate sector can be explained by economists at NAR who say that households in the US are growing in number again after years of falling behind the country’s rising population.
More homes needed
They say that in recent years, graduates were forced to move back to their parents or share a property with roommates but they are now in a position to take buy or rent property and this creation of new households which is generating demand for rental housing and real estate to buy.
However, the NAR says that there needs to be a sharp increase in home construction to help resolve supply problems and, they add, that such a move would create new jobs, new households and help housing demand.
Real estate analysts in America say it’s not all good news for the property sector and they point out that while demand is increasing from home buyers – the number of homes which are available to buy is at the lowest since 1999.
The inventory of properties available in the US is currently around 1.7 million which, at the current sales rate, will last just over four months.
Foreclosure problems
There is unlikely to be a flood of new homes to help meet demand and many analysts are cautiously eyeing the number of homes that have been foreclosed, or which are late with their repayments, with banks.
That’s because there are currently around 3.4 million such properties but the banks are handicapped because if they release too many homes for sale they will undermine the recent growth in sales prices.
In addition, many of those properties are still stuck in foreclosure action and would not be available for sale for a while yet.
Another reason being put forward for the increasing demand for property is that it appears that people are on the move in the US as increasing numbers of people head to where the work is.
