The other side of the coin
There's always more than one way to look at things, and while SA real estate commentators are mostly concerned about the slow growth of home prices, the 4000 delegates to last month's Inman Connect real estate conference in New York were trying to figure out how to deal with quite a different situation.
This is the fact that the US real estate market is currently being pounded by prices that are too high for the majority of prospective buyers, and especially for those in their 20s and 30s (millennials).
Figures just released by the US National Association of Realtors reveal that home sales dropped sharply in the second half of 2018, and in December showed a year-on-year decline of 10,3% - the biggest drop in more than seven years. In addition, pending home sales fell 2,2% to the lowest level since 2014.
This situation has not been helped by rising home loan interest rates in the US, but the main problem, delegates were told, is that most millennials - who now make up a very large and growing percentage of potential buyers - actually cannot afford to buy homes in the big cities where they prefer to live because of the plentiful job opportunities.
These include New York, where only 45% of homes for sale are affordable on the median salary for the area, San Jose (14%) Los Angeles (16%), San Francisco (26%), Seattle (42%) and Miami (48%).
However, a new survey by Redfin reveals that homebuyers have many more affordable options in other cities like St Louis (84%), Minneapolis (82%), and Pittsburgh (82%). Many of these emptied out radically during the Great Recession as their industries died and jobs evaporated, but are making a comeback now in a robust economy with very low unemployment. They typically offer work opportunities in healthcare, education and technology, and the real estate industry is hoping they will soon become the new trendy places for millennials to live.
06 Apr 2019
Author RealNet
