The US housing markets are currently on the rise after a devastating financial crisis that left the real estate market facing its lowest point for years. In 2008 the US real estate market reported its biggest price drop in history. The fact is that while the economy is recovering with most US housing markets trying to return to their pre-2007 real estate property prices, there are many areas around the country that are still suffering. Studies indicate that while in some states a high percentage of houses have recovered completely, many are still getting there or struggling to make it, so the full recovery of the US real estate market is not expected before 2025.
The US housing markets are on a recovery schedule in general because of the obvious improvements in the economy. Demand in the real estate market as well as other key indicators are a result of that stronger economy. A stronger job market, increased consumer confidence, and mortgage credit supply improvement have all contributed massively to the recovery of the US housing markets. These three figures are what defines the economic strength of the population to dig into the real estate investing possibilities.
For the common real estate investor, there are two types of US housing markets that simply do not offer good real estate investment opportunities at the moment: unhealthy markets and suffering markets. On the one hand, there are housing markets such as Los Angeles which have become so overpriced that it is extremely difficult for investors to buy rental properties there. This comes as a direct result of the housing crisis a few years ago. Such real estate markets are unhealthy. On the other hand, you have the housing markets that have still not recovered in full from the collapse in 2008, and these are the suffering ones.
After the financial crisis, house prices in the big cities went down, which saw a high level of demand on purchases. The demand aided the recovery of these housing markets because it created all economic opportunities such as jobs, confidence in the market, and better mortgages. But after these markets started to recover, demand didn’t stop, which caused the prices to surge to unprecedented levels. The increase in prices in these US housing markets was not paralleled by an increase in wages from jobs. This left many of the locals and the workforce in those areas on a limb, because they are being priced out of owning a real estate property there.
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The Unhealthiest US Housing Markets
- New Jersey and Long Island top the list of the unhealthiest US housing markets because of the ever-increasing housing prices coupled with a much slower increase in job opportunities and population growth.
- Los Angeles and San Francisco face an identical problem. The prices in these two cities are extremely high for the average real estate investor or potential homeowners to be able to purchase properties there. The availability of jobs and the population growth are increasing demand for real estate properties in a negative way.
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The situation in these major cities threatens to disrupt their economic stability. The fact that most people living there are unable to afford a house is a cause for concern. That inability to provide people with a long-term future in the form of housing threatens the economic stability through shifting population growth. The longer people are unable to get better jobs or find cheaper housing, the more determined they become to leave in search of better opportunities in other US housing markets.
The Most Struggling US Housing Markets
The struggling real estate markets in the US are those that have been unable to recover significantly after the housing crisis of 2008. This is obvious through many factors like current house prices compared to pre-recession prices, job growth, income growth, and population growth. The fact that these markets are still suffering could be a direct result of population relocation during the housing crisis. People who were hit by the crisis in these areas have had to lose their homes on the cheap and to try to rebuild their lives in other areas that offered better job and housing opportunities. This explains the correlation between unhealthy markets and suffering ones.
People who have moved from suffering markets during the crisis to relocate to the bigger cities have played a part in pushing the prices way above average in those unhealthy markets. The suffering US housing markets are usually those with worse job opportunities and economic growth.
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Las Vegas, Nevada
The housing market in Las Vegas is suffering greatly with the number of homes that have returned to pre-recession levels reported to be 0.6%. The current home prices stand at $215,000 on average compared to $305,000 in pre-recession times. The job market has also been suffering with income growth reported to be at -5.2% and job growth at 18%.
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Tucson, Arizona
In Tucson, Arizona the situation is slightly better with the number of homes that have returned to pre-recession levels reported to be 2.4%. The current home prices stand at $180,000 on average, compared to $236,000 in pre-recession times. The job market is seeing slow positive growth with income growth reported to be at 4.8% and job growth at 2.2%. The problem in Tucson can be identified by its job growth rate, which shows how improving the economy would be hard.
Camden, New Jersey
Camden is suffering mainly because of population and job growth. The number of homes that have returned to pre-recession levels is reported to be 2.7%. The current home prices stand at $195,000 on average, compared to $245,000 in pre-recession times. The suffering areas have seen diminished improvements in population and job growth of 0.3% and 0.5%, respectively.
The truth is that while the US housing markets have improved on an average level,there are many cities that are still suffering the results of the housing crisis. The solution to improve US housing markets all over the country is through a stable and growing economy. An improved economy that gives people better jobs and better pay will result in gradual recovery for suffering real estate markets. The unhealthy US housing markets also need to be dealt with because the unregulated increase of housing prices and rents is becoming disastrous for the majority of people.
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