US property continues to shout, "I am in recovery come and invest in me" as the latest round of data shows positive steps in all the right directions; with rising resale sales, rising sale prices, rising values and rising rents – of course the scores of foreign investors who have bought US property in recent months will be particularly happy with the latter two.
According to the National Association of Realtors sales of existing homes grew by 2.3% on the month in July and were 10.4% higher than July 2011 at a seasonally adjusted annual rate of 4.47 million units. Meanwhile according to the Federal Housing Finance Agency, house prices grew by 1.8% in Q2 compared to Q1, and were up 3% compared to Q2 2011. According to the FHFA this was the highest growth since the final quarter of 2005.
Buyers and analysts alike are starting to genuinely believe in the bottom, and as domestic buyers return they are adding to the millions of foreign bargain hunters and investors which is driving up prices.
"We have definitely hit a bottom in home values nationally, but we don't expect to see them continue to rise as quickly as they are now," Stan Humphries, chief economist for Seattle-based real estate information service, said yesterday in an e-mail. "As more home-owners rise out of negative equity, many will try to sell their homes, adding to supply and causing price appreciation to moderate."
Zillow the US' second largest online real estate portal confirms the price growth, in its latest market reports it records a 0.5% growth in home values in the month ending July, and a 1.2% growth over the year. Zillow also has solid rent growth as well. The portal recorded a 0.2% increase in rents over the month and 5.4% over the year. It says that rents have increased in 6 of the last 12 months, and by double digits over the past year in large metros like Chicago (12.6 percent), Providence, R.I. (12.1 percent) and Baltimore (11.9 percent).
This is likely due to both continued high foreclosure levels in these markets, which increases rental demand, as well as consumer reluctance to buy when home values continue to fall.
"This summer, the housing market continued to heal, as home values experienced their eighth consecutive month of increases," said Zillow Chief Economist Dr. Stan Humphries.
"Tight inventory levels are leading to bidding wars and multiple offers across the country. Looking ahead, we expect to see less aggressive increases in the fall as rising values lift some would-be sellers out of negative equity, allowing them to place their homes on the market."
- Tuesday 28 August 2012