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US real estate market is not yet promising - experts

16.09.2011
Homesoverseas.ru editorial office
33
The US real estate market is not promising yet, experts from IntermarkSavills believe.

According to the company, sales housing in the United States, to the surprise of experts, fell by 3.5% in July compared to June (from 4.84 million to 4.67 million units), although their level still remains higher than a year ago.

The monthly decline affected all regions except the West, which continues to show a high level of activity. The average cost of new housing fell by 6% in July to $222,000.

The gap between the cost of new and secondary housing is increasing, and today it is more profitable not to build than to build and incur losses. The salary of builders has not increased for four years in a row, while the cost of building materials is increasing, and this is reflected in the cost of housing. Therefore, the recovery of the primary housing market will be slower.

"Today, a very limited number of borrowers have access to mortgages in America, while the prevailing price level in the real estate market is the most favorable since 1970. However, the main engine of the real estate sector in the United States are banks and until the problems in the banking sector are resolved, I would not consider the United States as a promising market," says Igor Indriksons, director of the department of investments in foreign real estate at IntermarkSavills.

The number of transactions remains insignificant, but the market could easily move to a recovery phase if mortgage lending standards became less stringent. Now the market has all the prerequisites for an increase in the number of transactions: rising rents, tight credit availability conditions and an influx of investors seeking to reduce their inflationary risks with the help of real estate.

In June, real estate prices in major cities of the country showed an increase for three months in a row, according to the Case-Shiller index. From May to June, prices rose in 19 of the 20 cities. So, in the second quarter of this year, compared with the first three months, the average house price in these cities rose by 3.6%.

However, over the past year, adjusted for seasonal factors, residential real estate prices in the United States have fallen in all 20 cities. In Chicago, Minneapolis, Washington and Boston, the monthly growth was the largest, while the smallest price increases were noted in Las Vegas and Phoenix, which suffered the most from the crisis (subprime points). The share of distressed real estate in the country now accounts for 29% of the total supply.

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