The truth about the US property market?

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Are you interested in the US housing market? New research has revealed some fascinating insights into the direction in which the beleaguered US property market appears to be heading.

According to the BlackRock Investment Institute, there are signs that US house prices may have reached rock bottom, as declines over the next year or so are predicted to reach “minimal” levels of up to 5 per cent.

“Home prices in the United States have fallen to 36 per cent from their peaks, and we believe the decline is slowing – and perhaps on the cusp of reversing itself,” said BlackRock chief investment strategist Ewan Watt.

“Our base case takes into account competing market forces. On the one hand, many indicators are pointing upward. These include slowing price declines, increasing affordability, an uptick in loan demand and a reduction in supply. This is counterbalanced by factors such as the effect of retiring baby boomers, the weak financial health of the US consumer, the difficulty of obtaining a mortgage and regulatory uncertainty scaring off investors.”
Adding that a “tidal wave” of baby boomers is expected to start retiring and downsizing over the next decade, other factors that Watt believes will be crucial to the US property market’s future performance include:

  • People are marrying later.
  • College graduates are burdened by student debt and are unemployment, depriving the market of its traditional source of demand from first-time buyers.
  • Tough lending standards are another hurdle.

“Taking into account supply and demand factors, we don’t expect a quick rebound to the heady levels of the early 2000s, it is more likely the recovery will take the form of a long, flat ‘u’ rather than a ‘v’. It may even flatline for a while,” he warned.

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