- The U.S. housing market’s good days could come to an end thanks to coronavirus.
- Chinese investors have played a key role in propping up the market.
- They could take away billions of dollars worth of demand thanks to the epidemic.
A low mortgage rate environment and the lack of inventories have been tailwinds for the US housing market over the past year. But the coronavirus epidemic is one big threat that could cause the U.S. housing market bubble to burst at last.
Realtor.com reports that the housing market inventory in the US was down . 6 percent in January . This was the largest annual decline seen in four years. What’s more, the report states that the listing volume of new properties was also down 17. 6 percent year over year, indicating that the inventory shortage could be here to stay.
This severe shortage of homes for sale in the U.S. housing market has the potential to price buyers out in . Realtor.com chief economist Hale adds:
Homebuyers took advantage of low mortgage rates and stable listing prices to drive sales higher at the end of , further depleting the already limited inventory of homes for sale. With fewer homes coming up for sale, we’ve hit another new low of for sale-listings in January.
This is a challenging sign for the large numbers of Millennial and Gen Z buyers coming into the housing market this homebuying season as it implies the potential for rising prices and fast-selling homes — a competitive market.
As it turns out, homes in the U.S. are getting more and more expensive with each passing month. The median price of a home listed for sale went up by 3.4 percent in January to $ , . For some perspective, wage growth stood at 3.1 percent during January. If the U.S. housing market fails to add new supply quickly and prices keep spiking, buyers might start pulling out of the market.
At the same time, the pull-out by Chinese buyers on account of the coronavirus outbreak will be another headwind for the market as billions of dollars could go out from the demand side. These two factors could dent housing demand in the U.S., which might eventually cause a downturn in pricing and spark a potential crisis in the market.
This article was edited by
Samburaj Das . Last modified: February 17, (5:) AM UTC
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