American real estate market members are having a headache because of the situation left behind, when everything should have gone in the right direction, but in fact is not.
The US economy is proving its strength is improving, with “dream” data. The number of jobs increased for 91 consecutive months, pushing the unemployment rate to the lowest level since 2000. Latest unemployment data show that only 3.8% of Americans are unemployed in May. A rare development in the economy also occurs, when the total number of new jobs created is higher than the number of unemployed people.
Besides, the average hourly wage has also reached US $22.59/hour, up 2.8% in May – the strongest increase in nearly a decade. In particular, retail trade is one of the industries witnessing the fastest increase in wages, with an increase of 4.4%. Notably, in the construction sector, which is famous for its low wages, workers also have an average wage increase of 3.6%, reaching $27.50/hour.
Along with rising wages, the total asset value of households in the US also climbed in the last quarter. If before the crisis period, the total assets of all US households were about 66,000 billion USD, then fell to 55,000 billion USD when house prices and real estate market plunged. Currently, this figure has surpassed $ 100,000 billion (at the end of 2017, it is $98,700 billion), when both house prices and stock markets are setting peaks.
Yet, despite the positive economic background, home sales are not growing at all. Even the number of existing houses sold has decreased by 1% since the beginning of the year. The number of newly built houses awaits their owners at a higher level than last year, though still under construction capacity.
Currently, the total sales of new and existing houses are at the same level as in 2000. Specifically, the number of existing houses sold reached 5.2 million units, the number of new houses reached 900,000 units. This number is now 5.5 million units and 650,000 units respectively. Meanwhile, the number of people in the United States has increased by 40 million, with an additional 17 million new jobs compared to 2000. Not to mention, the home loan interest rate in 2000 was about 8% per year, while Currently only about 4.6%/year. So what’s going on?
According to economic experts, the United States is in an abnormal situation, when the real estate market is hot, but home sales do not increase. One of the main reasons is the lack of supply. Accordingly, the US real estate market is flooded with existing houses for sale, but few buyers, because these are large-sized, or high-value apartments, where owners or environmentalists want to trade through their hands to make a big profit.
In addition, the lack of new housing supply also makes current apartment owners worried that once sold, they will not find a suitable new home. This is the reason, in recent years, the average owner time of a house attached to the house is up to 8-10 years.
The real estate market is hot when house prices are constantly increasing, while people still lack the choice to suit their desires and affordability. This is why despite the stable economic development, home sales are not as positive as expected.
Building new homes will create more jobs, boost the local economy, increase tax revenue, make home prices more suitable and increase home ownership rates. This is what the United States needs to do to solve the current situation.