Ever since home price crashed in 2008 due to secondary mortgage as well
as global recession, the overall real estate economy has been gloomy for years.
Even though numbers of house sales for the past two months seem to show the
sign of house price recovery, many factors discovered these days can reflect
the fact that real estate economy might not recover anytime soon.
First of all, banks are holding too many “Shadow Inventory” (such as
bank owned or short sales units) and seem to be reluctant to release those
units. The reasoning behind that is simple because banks want to recover the
loss during the recession by trying to sell the house at the best price
possible. Therefore, they are doing a good job controlling market supply to
ensure home price remain strong.
Second, many foreign inventors start to jump into US real estate market since
the house price is too attractive to be missed resulting in surge in first
quarter sales. However, based on the statistics from Department of Real Estate,
average price of house bought by cash buyer is around two hundred thousand
dollars. In other words, the foreign investors are mainly interested in condos and
apartments rather than houses. In this case, it doesn’t really help overall
real estate market because majority of the properties holding inside the pocket
of the banks are single houses.
Third, presidential election is approaching, which means that the US
government has strong incentive to see home price bouncing back, even just for
a short period of time, because home price is always an important index for
current economy status and consumer confidence. Besides, summer and fall are
usually the high season for real estate market so US government could stay with
the flow and somehow maintain the sales numbers till election.
Based on all three factors above, the current sign of recovery in home
price might be just a temporary phenomenon that is said to lead to overall economy
recovery. With remaining high unemployment rate, especially in California and hiking
gas price, it is difficult to believe that we are heading towards economy recovery.
Notes: For people who are interested in buying or selling houses, please contact us at info@cadreamer.com or give us a call at 626-757-1520. We speak English, Japanese, Mandarin, Cantonese, and Taiwanese. Thank you for visiting our blog.
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