Real estate market in U.S.A is declining apart from New York City that indicates some strong pulse especially in the high-end residential areas. For example, in June, the state recorded sales for the most expensive apartment by selling the penthouse at One57 with over $90million, which was equivalent to $8,000 per square foot. This marked the second record as the state broke the first record within the real estate in January when the Dmitriy Rybolovleb bought a penthouse apartment located in the 15 central park west for $88 million, which was similar to $13,000 per square (Newell & Chris, 317). Even though the price inflation is most visible in the state irrespective of the asset and class, the performance of real estate in New York is and will continue outperforming other countries and significant cities around the globe. However, research indicates that the links of real estate in U.S is falling at a high rate as the industry is encountering different issues ranging from the financial system to other essential sectors hence affecting real estate market. However, U.S real estate industry faces dissimilar problems including the fact that potential buyers of the commercial property always offer less money compared to the seller’s expectations (Hazard, 3).
Local real estate market trends and observation
U.S.A believes that it is imperative to invest in property that can provide an individual with resonance investments. They consider this in both the rental yield as well as the capital appreciation. Even though the U.S property market is going through high growth rate now, there is a significant difference between good and bad investments in the rental returns and capital appreciation. U.S considers land to be a lavish commodity making the prices to be rising slowly but steadily for the past decades. The state does not encounter problems in financing since it receives continuous tourists throughout. The conducted research in 2002 indicated that the country’s residential market grew by 6%, which were approximately 2 million units (Newell & Chris, 319). Additionally, in 2003, the growth increased to 2.1million, which originated from the low interests experienced during the year thus increasing the total demand. At that period, the country’s largest sector within the residential property market remained to be a single unit structure. However, this accounted for over 80% of the total market value experienced in 2003. Consequently, this made the U.S residential market to be fragmented, which made the most valued companies within the market to account for only 8.1% of the total market value in 2003 (McKenzie ,89).
In 2003, the conducted research revealed that the U.S residential property market was to grow with approximately 14.6%, which meant rising from 2.2 million units in 2004 up to 2.5 million units in 2008(McKenzie 93). In U.S, Miami is among the valued real estate market as its prices appreciate approximately 61% for the past decade. The state encounters low rates of mortgage as well as steady sales volume resulting from the increasing population originating from Latin America and other surrounding states (McKenzie, 95). Therefore, the population has been beneficial because it helped in keeping the real estate market on the lime light hence raising its prices. Even though the real estate prices in Miami are always increasing, the households have an advantage in that they can purchase them using the medium single-family home price, which are around 215,000. Most real estate investors have a lot of interest in investing within the hot strip of Miami a place called Sarasota. The estate is on high demand and it goes for high prices ranging from $300,000 to $10 million (Hazard, 6). The high prices are because the real estate is within walking distance to access necessities such as restaurants, shopping malls, theatres and cultural areas among others (Hazard, 7).
The real estate business in U.S is attracting because in both cities and suburban areas, many people are gaining interest of purchasing homes, condominiums as well as lofts immediately after Florida real estate developers build them. As a result, this has made the demand to outpace the supply causing the initial offerings and the pre-construction prices to lure the bargaining-hunting. This has increased the waiting list among the Florida real estate developers as many people are placing their house orders. Research conducted by the real estate developers revealed that many people in U.S are opting to purchase land in order for them to replace the existing dwellings with their own luxury homes. Additionally, the research also revealed that the value of homes around the state has increased with over 87% for the past 5 years. The research concluded by advising the individuals interested in investing in property around South Florida that it is their time to take a plunge (Grubb, 2).
The real estate prices in U.S are still in favor of the British buyers, as they can purchase a spacious house with $190,000. There are dissimilar real estates in varying states around U.S. For example, California has a real estate called Sacramento, which is among the oldest city within the state with varying property of 2 to 3 bedroom townhouses, which goes for about $269,000. The state also has Palm Beach estate, which is quite expensive compared to Sacramento because it is a four bedroom detached house and costs $1,800,000. However, the most expensive city to buy a property or an apartment in U.S is New York City as a five bedroom detached house goes for about $2, 500, 000. When one moves to Hudson estate located some kilometers from New York, the prices start getting reasonable because an individuals can purchase a four bedroom detached house with $110, 000. Finally, Texas is also among the most attractive real estate market in U.S making it to accommodate immense British migrants compared to other states. Texas has big cities and beautiful beaches but the real estate prices are affordable and reasonable.
Additionally, Washington sells millions of homes on a yearly basis. In 2011, it sold 4,260,000 homes and in 2012, it was forecasting on selling about 4.5 million homes. This implies that the real estate market in Washington is going to increase by 5%. There are varying problems that affects the real estate market in Washington making t to reduce the welling prices for homes from 7 million to 4.5 million.
The real estate researchers have made varying observations. For example, they conclude that real estate in U.S is an inflation hedge. Many people fail to believe and understand the manners in which real estate can turn out into a good hedge against inflation. The economic theory states that inflation should be capable of bringing about high interest rates. Interestingly, there is an opposite connection between the value of interest rates and the real estate values making it hard for individuals to imagine real estate as an inflation hedge. The doubting occurs because real estate is not hedge against inflation (Invesco Core Real Estate - U.S.A 1).
Through the observation, there are some noted factors that affects real estate in U.S. these include the interest rates, whereby lower rates makes a real estate to be affordable to the buyer of the property. Compared to other affordable assets, most real estate buyers go for mortgage because the estates entail high interest rates. Lower interest rates are also beneficial to real estate because they generate money using differing means including refinancing, which stimulate employment from the banks and lenders as well as other acceleratory jobs. Additionally, low interests are imperative in real estate, for instance, in the commercial market, low rates attract greater cash flow or net spendable. However, in within residential areas, low rates allow interested party to borrow with same amount unlike fewer amounts of greater interest rates. Finally, low rates are more advantageous to buyers as it enables them to demand more property while it is disadvantageous to the real estate industry in U.S (Invesco Core Real Estate - U.S.A 2).
Secondly, economy is also a significant factor that has a national and international impact on the real estate market. From the lowest economic buyer to the wealthiest individual, it is imperative for one to be gainfully employed in order to enter the market for purchasing a house. Individuals with financial crisis find it hard to purchase the real estate property in U.S. Notably; low wages is also a significant factor that affects the real estate market in U.S because they disable individuals from purchasing the homes. High net worth of an individual lowers their spending limits for a home hence limiting the higher end homes sales. This implies the relationship existing between supply and demand, in that less demand lowers the prices thus negatively affecting the real estate industry in U.S. furthermore, the prices of real estate is also magnificent factor that affect real estate because some encourage demand while other deteriorate (Grubb, 1).
This paper highlighted the U.S market for real estate as well as the existing trends and made observations. Therefore, the paper offers an in depth analysis on the U.S real estate investment and the development of the trends, real estate finance, capital markets, property sector and other issues affecting the real estate. According to the discussion, there are some possibilities of the industry experiencing slow down in the coming years. This is so because the emerging trends indicate the industry expect returns from property type to be satisfactory in order to revert to level closer to the historical average (Weinstein & Elaine, 387). According to the paper, there is nothing that lasts forever. It asserts that despite the presumed downturn in the nation’s economic growth, many people believe that economy contributes a lot in supporting the demand growth for the real estate. The paper claimed that even though the 2004-forecast report acted as good news to the commercial real estate industry, it also acted as a challenge to both the investors and users of the real estate. Therefore, they should be keen in the coming years. This is so because research indicates that the real estate industry will go on feeling the effects of global outsourcing as well as increasing the workers productivity (Weinstein & Elaine, 387).
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