2023-08-11 14:44:18
Strange, but technically logical! Like other western economies, the US real estate market is suffering from the fact that interest rates have risen sharply. So real estate prices would have to fall drastically so that homebuyers can compensate for their additional interest costs with cheaper purchase costs? But this is not the case. The total value of real estate in the USA has recovered from a loss of 3 trillion dollars!
How the US housing market is clawing back $3 trillion from recent downturn
After a estimate by brokerage firm Redfin, the US housing market has regained nearly $3 trillion lost during last year’s economic slowdown, Bloomberg reports. A lack of housing supply in the US has pushed up prices, taking the total value of US homes to a record $47 trillion, according to Redfin.
As a result, many homeowners have secured cheaper mortgage rates ahead of the rise in borrowing costs over the past year and are now reluctant to give up those loans. According to Redfin, just 1% of homes in the US changed hands this year, the lowest rate in at least a decade. So the curious logic of the real estate market is this: Owners “stay because moving would mean double the rate,” according to Chen Zhao, research director at Redfin Economics, in the report. “That means the buyers who are in the market now are dueling for a very small pool of homes, which is preventing property values from collapsing.”
Rising and falling prices in individual regions
Atlanta’s real estate market saw the largest increase in value at $40.1 billion over June last year. Boston recorded an increase of $33.4 billion, while values in Miami rose by $30.3 billion. The largest percentage gains were in relatively affordable markets. In Little Rock, Arkansas, homes rose 8.8% year over year, while in Camden, New Jersey, values rose 8.7%. According to Redfin, the more affordable costs in these cities have likely boosted buyer demand.
Levels fell in 32 major cities from a year earlier, with California cities hardest hit. Los Angeles saw the largest decline — nearly $153 billion — followed by Oakland at nearly $86 billion. In San Francisco, real estate values fell by $58 billion.
FMW/Bloomberg
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