US Housing

US Housing Market Focus

US Housing Market Focus

How pandemic changes will affect US metros

Americans are returning to cities, but the return to the office has been much slower. We see suburban areas being net winners in the residential and retail sectors, although the picture for downtown versus suburban offices is less obvious than the national data currently suggest. What is clear is that the winning metros will tend to be cheaper, and in mostly southern states. These will attract newly footloose workers, which will directly support the residential markets in those metros and will also have a positive effect on demand for office, retail, leisure and industrial space. In view of the wider interest, we are also sending this US Commercial Property Focus to clients of our US Housing service

22 October 2021

US Housing Market Focus

Which apartment markets will benefit most from remote work?

We think that for the extra one million footloose American workers created by the pandemic, the cost of living has become far more important to their decision of where to live than in the past, while the “desirability” of a metro and its climate have also risen in importance. On the other hand, job opportunities and local earnings have fallen in significance. Our analysis points to several southern metros benefiting from this, with eight of our top-10 ranked metros situated in Florida, Texas and North Carolina. Conversely, the relative losers are dominated by more expensive northern coastal metros, as well as less “desirable” metros that still demand mid-range asking rents. In view of the wider interest, we are also sending this US Commercial Property Focus to clients of our US Housing Service

28 September 2021

US Housing Market Focus

The death of house price cycles?

The housing market is highly cyclical, and the current price boom marks the fifth episode since 1970 where real house price growth has exceeded 5% y/y. But there are good reasons to think this will mark the last house price boom for next 30 years. Interest rates are already at record lows, and we expect they will rise gradually over the next 30 years. New regulations mean credit conditions have not loosened even as house prices have boomed, and that argues against a repeat of the mid-2000s boom. Overall, once the current cycle has passed, we expect house prices will grow more-or-less in line with earnings, leaving real house price growth at around 1.5% y/y from 2030 to 2050.

12 August 2021
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US Housing Market Focus

Savings will support down payments and house prices

Stimulus cheques and a lack of opportunity to spend money pushed the saving rate to a record high last year. Some of that saving made its way into down payments, with the average first-time buyer putting down an extra 30% in November compared to a year earlier. We doubt that was a key driver of the surge in home sales, but we do think it contributed to the rapid acceleration in house price growth. The saving rate is set to fall back this year, but the large stock of cash built up over the past year will keep down payments relatively high. In turn, that will provide support to house prices over the next year or so.

4 May 2021

US Housing Market Focus

Higher online share to boost logistics demand by 15%

Virus-driven behaviour changes that support a faster online transition will boost industrial demand over the coming years. But we don’t believe the view that higher online spending will cause rents to detach permanently from the underlying strength of the economy. And since we don’t expect to see the sort of supply shortages that plagued the UK market in recent years,…

19 November 2020

US Housing Market Focus

Is COVID-19 the death-knell for physical retail?

Retail has been hit hard by the COVID-19 crisis and lasting changes to online spending will bring further pain. While our estimates suggest that the impact is likely to be less severe than structural change in offices, the rental outlook is expected to remain weak and a faster online transition will reinforce this. In the longer term, we expect the sector will continue to underperform, though how much will vary between markets and will be driven by both online migration and other market conditions. Overall, the UK is most exposed, along with a few European markets, while the US may also be vulnerable later in the decade.

8 October 2020

US Housing Market Focus

The outlook for housing in a post-COVID world

Even after the immediate threat of COVID has receded, we expect as many as 50% of office-based employees will work from home at least once a week. But the move away from cities and toward the suburbs should prove short-lived. Most of those leaving cities will have brought forward a planned move, and changes in relative prices will rebalance demand. With…

US Housing Market Focus

Remote working to hit office income by 20-25%

We think that the enforced remote-working experiment of recent months will cause a dramatic demand shift in the office sector, with as many as 50% of office-based employees working from home at least once a week. Even with a heroic supply response through substantial conversions and demolitions, we expect vacancy to rise markedly in the next five years and still…

6 August 2020
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