Trends Shaping The Real Estate Market Of The USA

The market experts predicted that the home prices and mortgage rates would continue to rise slowly next year. In one such panel discussion, experts of the real estate market stated that the market would continue to look skeptical despite trying its constant strife to recover. This actually led to believe that even the experts are baffled and it also suggested that the housing market had reached its inflection point. With so many home prices in the market at or above the pre-bubble levels, there is no expectation for a rebound effect, and the result is that home values would continue to increase each month.

Dictating the trajectory of this price bubble are the fundamental factors like population and increased disposable income as well as tastes of a new generation of home buyers who are reshaping the market as we know about it. As per John Eilermann in St. Louis of McBride Homes, the new wave of millennial would continue to boost the prices of the market. A few years back, the US has been stuck in an economic rut, which actually dragged down the demand for the homes. Furthermore, in the past decade the largest population constituted mainly of baby boomers who had long ago settled and started families.

Now, the situation has completely changed with 20 year olds with increased incomes and families holding the larger share of the population. This part of the population would soon start looking for homes, which would in fact, drive for more than two thirds of household formations over the next five years. John Eilermann agrees that this year, the presence of the millennial generation would be finally felt in the market, especially in the affordable Midwest and south areas of the country.

The second major trend would be actually seeing the increased demand from the younger generation who would seek housing in places where it is tough to construct. Market experts like Tracy Luttrell thinks that since the housing crisis was made aware, the total number of owner occupied homes has remained flat. One of the major reasons contributing to this is that the builders have not been able to construct much of the homes that caters to the needs of the single family.

This kind of home construction has been so less that people are preferring to live in houses which are expensive and where it is difficult to build. This is often jokingly referred to as the ‘millennial mismatch’. Most of these millennials are seeking for places in New York, Austin and Honolulu where the homes remain affordable.

John Eilermann in St. Louis also thinks that the mortgage rates would continue to increase even if the analysts are sure that mortgage rates would increase this year on the back of an improving economy. Despite all these factors, major market specialists are actually predicting that this year the rate would rise in earnest. This is mainly accredited to the improving economy and lack of stimulus from the Federal Reserve. Even if the price increase continues, it would decelerate and affordability would decline.