Property prices remain stable despite the collapse of transactions

Loan rates are rising and sales are collapsing, but buying real estate in the US is still (almost) expensive.

Should we still invest in real estate?

According to the National Association of Realtors (NAR), U.S. pre-owned sales in November fell more than 38% from the January peak for 2022. At the end of October, benchmark 30-year mortgage rates in the American market reached 7.16% per annum, which is the highest indicator in the last 21 years. They have calmed down a bit since then, but were still at 6.58% at the end of December. Despite this, “that market has clearly turned around says David Schlichter of Compass, a realtor in Denver, Colorado. ” We left the hottest market in history, (…) with overpriced goods within days, to an environment where it is no longer uncommon to close transactions below the initial required amount. ” If you have a fairly stable job and your contribution is reasonable, this is the best time to buy a year and a half or two years. “, says Drake, who is closing in on a home in Austin, Texas, that sold 4% below the advertised price.

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one” the market is still dominated by sellers »

I would have thought that interest rates would have a more pronounced effect on the market, but that is not what we are seeing now. says Richard Stanton of the Stanton Company agency in Montclair, New Jersey. ” We are still in a sellers dominated market “, believes Levi Lascsak of the agency Living in Dallas, which focuses on the third agglomeration of Texas. ” Last year we averaged 25 or 30 offers for housing. ” Today we have two or three. “. Since the historic peak in June, the average price of a property has fallen nearly 11% to $370,700. But it remains a 3.5% year-over-year increase and a 30% increase since May 2020, before the onset of the pandemic-induced shopping frenzy.

But that’s up 3.5% year-on-year and up 30% since May 2020, just 18 months ago.

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No one is predicting that the crisis will start again” subprime »

Moreover, no one predicts that the crisis will repeat itself. subprime », has plagued American real estate for several years, with a 27% decline in available home prices between the peak of June 2008 and the low of January 2012. The first element of market stability: the transformation of the mortgage landscape in the United States. In 2006, the ratio of loans with variable interest rates, which was close to 35%, has fallen below 10%. This should have allowed us to avoid the catastrophic situation as the country knew it after the 2008 financial crisis. At that time, the tightening of credit conditions, payment defaults and foreclosures exploded.

Even with the central assumption of a mild recession this year and a rising unemployment rate that could prompt some to sell, “ the increase in inventory (real estate) should not really be significant “, declares NMR Chief Economist Lawrence Yun.

As it turns out, US real estate inventory is less than a quarter of its pre-crisis level. subprime maintains the imbalance between supply and demand. As for new buildings, the pace of construction is gradually increasing, but remains less than a third of the 2006 rate.in the previous cycle, promoters built too much, (…), but in the last decade they have not produced enough. “, Lawrence Yun adds about a sector still marked by multiple bankruptcies after the financial crisis.

Mortgage production in France remains high in 2022

The Banque de France said on Thursday that the production of real estate loans should fall by 3% in 2022 compared to 2021. Production of new loans in 2022, excluding loan negotiations” It will amount to 218.4 billion euros “. This ” A historic high in addition to the exceptional production of 2021 “, the catch-up year after 2020 was overturned by Covid-19. According to agency group Century 21, on Tuesday, “ a real slowdown in the summer months “. According to the agency network, in general, real estate activity decreased by 4.1% year-on-year. Nevertheless, the Banque de France emphasizes, ” credit supply remained plentiful and cheaper compared to our major European partners “.

(via AFP)