The usually busy spring buying season was quiet for the US property market, but recent figures show that the trend has shifted. Homebuyers are back in earnest and taking full advantage of the country’s lowest mortgage rates ever. Analysts believe that many buyers are viewing the current situation as an opportunity rather than a challenge.
Mortgage applications soar
The Mortgage Bankers Association (MBA) reported that applications for home loans have seen steady increases across the US. In the last week of May alone, they rose by 9% compared to the previous week, marking the sixth consecutive rise. Since early April, mortgage applications have gone up by 54%.
This trend leads analysts to predict a busy June and July for the US property market on the back of pent-up demand from buyers. The market had a strong start to the year but suffered a decrease in demand during the stay-at-home recommendations.
Higher loans with lower interest
Mortgage loans in the US are currently at very favourable interest rates. At the end of May, a fixed 30-year loan had an interest rate of just 3.08%, one of the lowest ever. And this trend looks set to continue over the next few months.
“The low mortgage rates, without a doubt, are helping entice buyers back into the market,” said Lawrence Yun, Chief Economist at the National Association of Realtors.
Joel Kan, Economist at the MBA, sees the reopening of states as another incentive for buyers. “This allows buyers to resume their home search,” he said.
Higher mortgages on US property market
He also pointed out that mortgage loans have also risen steadily over the last few weeks. According to Kan, the average amount per mortgage loan in the US is at its highest level for over two months. By 22 May, it reached US$340,200, up from US$315,300 at the beginning of April.
The figures indicate the current appetite among homebuyers. Many are keen to get back searching after being forced to delay when many states imposed stay-at-home regulations. The current trend leads analysts to believe that buyers see the recent slowdown in the US property market as an opportunity, rather than a challenge. “Real estate may be viewed as a safe asset in the upcoming years,” said Yun.
Prices continue to rise
The pent-up demand can also be seen in house price trends. Although sales slowed during April throughout the country, prices showed no signs of coming down.
In Florida, for example, single family homes saw a price increase of 6% in April. Condos and townhouses registered an even higher hike and went up by 7.7%.
New-build sales rise
New-build homes are one sector that is moving in the opposite direction when it comes to sales. According to the Commerce Department, purchases of new single-family homes went up by almost 1% in April.
Analysts believe that this trend illustrates the shortage of supply on the US property market and expect more buyers to look at new homes in the immediate future. Those offering space, private gardens and in areas with plenty of natural surroundings are the most sought-after.
BRIC Group offers prime plots of land in Florida with investment starting at US$26,500. Buyers also have the option of a new-build upgrade, a product catering directly for the new trends in the US property market.
(Source: CNBC, Realtor.com)