Recent data coming out of the US shows that prices for residential property seem to be stabilising, but that inventory rates are staying high, and even increasing slightly.
What does this all mean? There has been much said about the type of recovery the US is expected to have. Will it be a robust ‘boom’ as has occurred in the most recent recessions or a double dip recession or perhaps a slow and almost stagnant period of growth (similar to Japan’s economy over the past 10 years).
I think it is becoming clear that there is not going to be a strong recovery – or a ‘boom’. Whilst the jobless rate remains so high (9.9%) I can not see any strong growth in house prices. Looking at the most recent data from the Bureauof Labor Statistics, there really are mixed signally of what employment in the US is doing.
One one hand the jobless rate has increased (9.7% to 9.9%) however the participation rate has increased (.3%) indicating more people were looking for work, and yet the long term unemployed (known as discouraged workers) has increased by almost 5000,000 in the past 12 months.
For a solid rebound in home prices to occur simply more people need to be employed. The US love of owning property has not changed. The dream of owning ones own castle will be flickering away, however that dream is just that, a dream, unless they can have stable employment.
So I have come to the conclusion that we can expect slow or non-existent growth in US residential house prices at least for the short to medium term.
See here for a press release from the National Association of Realtors on this point.
And visit here for Labor Statistics.