Current State of Real Estate Market in US

There are five stages, which determine the factors of real estate. They include the retail sector, industrial sector, commercial sector, investment sector and residential sector. In US, the market has slowdown. People are paying more taxes and more interest in their loan. For real estate, all the market sectors play an important role but the residential housing market is most influential. The residential rates begin with the bank rates and the consumer interest rates. When interest rates are low housing demands are high and as the rates climb demand begins to slide. The real estate market also depends on the unemployment rates. The lower unemployment is the great the demand for houses, the higher the house sales, and the higher the selling price. Therefore, as interest rates go up and unemployment rises there are changes in the market.

US Real Estate Market has acquired a gigantic silhouette and involves real estate agents, realtors, homebuilders, mortgage loans, insurance companies and other housing related industries. It is difficult to think of buying or selling of house in US. The main reasons for USA foreclosure are increased interest rate on Adjustable Rate Mortgage and subprime home loans. The slump in home prices is decreasing even the construction of new homes fell by 14%. Prices fell in half of the nation’s major markets and “existing home sales declined in 40 states. US economy is in danger of a recession that will prove unusually long and severe. Continuous buoyancy of the financial markets makes the economic situation worse. With that, sales are down, profits are eroding, and the building industry is facing a steady downturn there is also shrinking GDP. There is high rate of foreclosure in market. Many working class Americans are unable of pay off loans. The gap between two classes is increasing.

The lower rates also affect the stock market. Many will lose their money. The current account deficit (which includes the trade deficit) is running at roughly $800 billion per year, which means that the US must attract about $70 billion per month of foreign investment (US Treasuries or securities) to compensate for America’s extravagant spending. Foreign investment is drying up and the world is no longer interested to purchase America’s lavish debt. To solve the problem Federal Reserve can do is raise interest rates to attract foreign capital or let the dollar fall in value. If the Fed raises rates, the real estate market will collapse even faster which will strangle consumer spending and shrivel GDP. It will lead into economic crisis and a currency crisis. With decrease in housing bubble loses steam, American consumers will face increasing job losses and mounting debt. On the other hand, foreign investment will move to more promising markets in Asia and Europe causing a steep rise in interest rates.

Real-estate market is slowing down. The main reason is Foreclosure rates increased. Affecting borrowers with the best credit just as a crackdown in subprime lending standards limits the pool of qualified buyers. Subprime mortgage industry collapse due to higher-than-expected home foreclosure rates. Lead into bankruptcy, announcing significant losses and impaired prices of homes. There will be reduction of earnings of large people. As interest rates and mortgage payments are rising, owners started having difficulty in reaching their ends. Property prices rise for the United States as a whole there is Depression in real estate industry. The homebuilding prices have resulted in slowdown of real estate in US.

Leave a Reply