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The Future of the U.S Real Estate Market

The real estate market in the U.S is improving and will see a change in the year 2013. Even though gains in prices will be seen, it will still have a lot of homeowners struggling like they are now.

When it comes to working on the housing problems, most of the time the symptoms are addressed and not the cause. The core problem facing the U.S real estate market is that the housing units are excess in supply. In front of this problem, all the symptoms such as short sales, foreclosures, shadow inventory become meaningless.

Normally, the housing vacancy rate is about 1.5 percent on a national level. However, that has dropped down to about two percent. And coming the rental properties, the normal rate is 7-8 percent but it has shown improvement and is slightly above the usual rate.

Even though there have been gains, the problem still isn’t addressed. We still have a high number of houses while the demand is low. Even in such a scenario, real estate firms such as Brian F Prince’s Companies are doing a good job coping up with the ups and downs in the market in order to deliver value to their clients.

The improvement that is seen in the housing market today is only due to the fact that the growth of the demand surpassed the number of housing units constructed. There were more than 2 million units built in the year 2005 when compared to today where there are 750,000 units built. Knowing the annual need is around 1.5 million units, the number has to be accommodated accordingly so that along with everything, even the demand for vacation homes is fulfilled.

While it is too early for the real estate market to jump back to the normal conditions, 2013 looks like a good year where we could see over a million housing units seeing the light of the day. Even though this is a change from 2012, it’s not big enough to pull the market out of the puddle.

Home prices are predicted to rise in the coming year, but it won’t be a steep rise. Keeping aside the business cycles, housing price won’t appreciate more than five percent in the current scenario.

Finally, investors putting money in apartments will find that their small boom will remain small. The rising rents is the reason behind this, which has made owning an apartment cheaper than renting it. In the coming years, there will definitely be rise in the number of people buying homes vs renting them.The Future of the U.S Real Estate Market

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2 Comments

  1. I wonder if you think the real estate rental market strength might be a result of the real estate market as a whole – meaning, if this is a good time to buy, but not to sell, then we might see investors purchasing or holding properties, to profit when the market shifts.

    Even the few home owners that are in position to buy their new home, and hold their old a s rental until the market chances could affect the rental numbers to a degree.

    Curious about what your thoughts are?

  2. We are seeing a marked increase in housing starts and a decline in foreclosures. Though some of the decline in foreclosures can be attributed to an increase in short sales, however, as the economy improves and the job market stabilizes there will be less foreclosures.

    Due to so many having foreclosures on their record and are unable to buy a home over the next few years, we are seeing increasing rental demand which is driving up prices. For example in downtown Dallas the average home price is $81,400 yet the rental rate is $950 per month.

    Dallas Real Estate Infographic.

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