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…
Matthew Pointon Senior Property Economist
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US Housing Market Data Response

Existing Home Sales (Aug.)

Existing home sales dropped back in August as booming house prices and a lack of affordable inventory shut out first-time buyers. A small recovery in home purchase mortgage demand suggests sales may tick-up next month but with mortgage rates set to rise and inventory to remain tight that improvement won’t be sustained, and sales will end the year at around 5.7m annualised.

Drop-In: Evergrande – What are the risks to China and the world? Chief Asia Economist Mark Williams and Senior China Economist Julian Evans-Pritchard will be joined by Senior Markets Economist Oliver Jones to take your questions about the Evergrande situation. They’ll be covering the implications of collapse for China’s financial system and growth outlook, and assessing the global markets fallout. Register here for the 0900 BST/1600 HKT session on Thursday, 23rd September.

22 September 2021

US Housing Market Data Response

Housing Starts (Aug.)

A boom in multifamily construction has supported housing starts in recent months, with multifamily building permits rising to a 31-year high. On the single-family side, homebuilders have reported strong demand but material and labour shortages are preventing builders from getting to work on the large backlog of homes that have been authorised. Those constraints will not be solved overnight, so we except single-family starts will see only a gradual rise to around 1.16m annualised by the end of this year.

21 September 2021

US Housing Market Update

Stimulus cheques help explain house price rebound

After beginning to slow at the turn of the year, house price growth has since got a second wind. We suspect the key driver behind that resurgence was the arrival of the third round of stimulus cheques, which drove up the saving rate and helped boost first-time buyer down payments by 12% between February and May. But with no more cheques on the horizon and the saving rate stabilising that support for house prices will dissipate, supporting our call that annual house price growth will soon peak.

17 September 2021

More from Matthew Pointon

US Housing Market Chart Book

Home demand drops as prices surge

Despite mortgage rates seeing little movement in recent months, mortgage applications for home purchase have dropped to their lowest level since April last year. That implies home sales have further to fall. Booming house prices, which reached a record high 15% y/y in April, and a shortage of inventory are constraining sales. While low mortgage rates mean affordability is still historically favourable, lenders are not easing lending standards and that will be weighing on purchasing power. By contrast, rental demand is recovering as cities have reopened. The recovery in the labour market will cut arrears, and strong earnings will help boost rental growth. Total apartment returns will average a healthy 6% p.a from 2021-25.

7 July 2021

US Commercial Property Outlook

Major Apartment Markets Outlook (Q2 2021)

With cities reopening apartment demand will see a substantial rise this year, boosted by the arrival of households who delayed a move last year. Vacancy rates will fall back in all six major cities covered in this Outlook with those hit hardest during the pandemic, NYC and D.C., enjoying the most vigorous recovery in demand as tenants return. Strong prospects for NOI growth mean yields will either edge back or hold steady this year, driving substantial capital growth in all the cities. Beyond that, a gradual rise in yields and shift to larger apartments will weigh on returns. But even San Francisco, which will suffer from its high concentration of tech workers, should see total average returns of around 5.0% p.a. from 2021-25. At the other end of the spectrum, D.C. will outperform with average total returns of 8.5% p.a.

29 June 2021

US Housing Market Update

Valuations still reasonable despite house price boom

The housing market hit a milestone in April, with real house prices rising above the previous peak recorded during the boom of the mid-2000s. But that doesn’t mean valuations are at dangerous levels. House prices look far more reasonable when gains in incomes and falls in mortgage interest rates are taken into account. With house price growth now set to slow, the prospect of another bubble forming is therefore low.

22 June 2021
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