How hard do Americans work to buy a house?
According to CNN, Texas real estate agent Thomas Brown revealed that one of his clients in the Bay Area was interested in a house. In order to win the house, the Bay Area customer made an offer that was $100,000 higher than the seller’s price and immediately paid for the full price. However, nearly 50 quotations have been received for this house, and the conditions of customers in the Bay Area are uncompetitive.
Therefore, the Bay Area customer decided to buy another house from the seller.
Adam Bo, a partner at Cagle Pugh, said: “Although people across the country are willing to pay a premium for properties in Austin (the capital of Texas), I have never heard of anyone buying another house from the seller to facilitate the transaction.” In the current situation of overheating properties, he was not surprised.
Everything is because housing prices are rising so fast that even “distribution” has to get on the bus.
According to data from Zillow, a US-listed real estate appraisal agency, in the first quarter of 2021, a total of 310 houses were sold at a high selling price of US$1 million, and more than 940 homes were sold at a selling price of US$500,000.
At the end of June, the S&P & Case-Schiller House Price Index released the latest data: The April index reached 249.166, an increase of 14.6% year-on-year, the fastest increase since the index was compiled 34 years ago.
Write a love letter for buying a house
In order to grab the house, American homebuyers have their own magical skills.
According to local media reports in Knoxville, Hudson Lagacy Group’s real estate agent Nikita Hudson suggested that in the hot real estate market, buyers should try their best to make their bids “creative”.
For example, she said that one of her clients was able to stand out among many bidders because she wrote an affectionate letter to the seller and even attached personal items such as photos. After the successful transaction, the two also had a champagne lunch together.
According to CNN reports, in early May, some buyers were not only willing to pay the full payment at a super premium price, but also prepared to give the seller 10 additional ethers. At that time, the price of ether was about 3900 US dollars per piece.
Some buyers also suggested that if the seller is willing to sell the house to themselves, the seller can continue to enjoy the backyard and garden of the house within 5 years.
Glenn Kelman, CEO of real estate broker Redfin, revealed on Twitter that a buyer from Maryland, USA, in order to please the seller, promised to the seller: if he is willing to sell the house to himself, his child will be born soon. Name it after the seller’s name.
The seller is still unmoved.
Quantitative easing has not stopped
Since the Fed has been in a channel of interest rate cuts since Trump took office in 2016, U.S. housing prices have actually been in a moderate channel.
However, due to the new crown epidemic, the Federal Reserve’s aggressive interest rate cuts and the expansion of the US government’s large-scale fiscal deficit, US housing prices have risen rapidly since June 2020.
In the early morning of July 29, the Federal Reserve decided to keep the federal funds rate unchanged at zero to 0.25%, and will maintain its monthly asset purchase plan of $120 billion. Fed Chairman Powell also emphasized that raising interest rates is still a distant matter.
At present, the Federal Reserve is still maintaining US$80 billion in national debt and US$40 billion in mortgage securities.
The Economist pointed out that the general environment of low interest rates and insufficient housing supply after the epidemic have caused the current round of housing prices to rise. This means that the currency over-issuance process is still going on, and there is no sign of a fall in US housing prices in the short term.
Expert: Housing prices have not yet reached the bubble stage
According to data from the American Association of Realtors, as of the end of June, the median price of existing homes had risen to US$363,300, a year-on-year increase of 23.4%, setting a record high again.
But Moody’s chief economist Mark Zandi believes that although the real estate market has approached the pressure line, it has not yet reached a bubble.
Mark Zandi mentioned in a CNN column at the end of June that at present, the main premise for falling housing prices is the need for a large number of mortgage defaults, but after the epidemic, the lending standards of commercial banks are not loose.
He wrote: After the epidemic, although the Fed has over-issued US dollars to a certain extent, it has also loosened the SLR indicators of the banking industry. However, commercial banks are more cautious in lending standards than in previous years due to concerns about the economic prospects. In the end, the buyers who can get loans are all people with outstanding debt repayment ability. This is completely different from the 2008 loan buyers who are subprime lenders with weak debt solvency.
But Zandi believes that the pressure line for housing prices has already emerged. When he looked back at the ratio of house prices to income and the ratio of house prices to rents, he found that the current U.S. house prices are about 10-15% overvalued. Some regions, such as the southern and western parts of the United States, are overestimated by more than 20%.
You can sell it, but you can’t buy it
Austin, Texas is located in the southern United States where Zandi believes that housing prices are seriously overvalued, and is one of the most enthusiastic cities in the United States for real estate transactions. The Benton family has been repeatedly frustrated in the process of searching for housing. The family used to live in downtown Austin, and this year, they plan to change to a bigger house.
The sale of the original house went smoothly: it was sold at a premium of 8% after only one week of listing. But when buying a new house, the family was dumbfounded. In the overheated real estate market, either buy a house at a higher price or just move out of the city.
The real estate agent told them that in order to make a deal, they need at least a 30% premium over the selling price and the transaction is in cash.
The Bentons finally gave up their house purchase plans and chose to rent in the suburbs of Austin.
Countless families like Benton gave up their plans to buy a house and started renting.
Selma Hepp, deputy chief economist of real estate finance company CoreLogic, mentioned, “As housing prices become very expensive, more and more people are withdrawing from the home-buying race.”
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