Real estate is becoming more expensive
The decrease in real estate sales volume, which was observed for 3 months due to the decrease in general economic activity, was the reason that in May this year S&P CoreLogic Case-Shiller National Home Price Index was only 4.5% more than in 2019.
In April, the annual increase was 4.6%, but the subsequent situation was reflected in the fact that in May, demand for previously built houses, which constitute the majority of the market, decreased by 9.7% over the month. However, as early as June, 20.7% more properties were purchased, which was strong evidence that the current recession caused by COVID-19 did not affect the real estate market as much as last month.
The decline in prices could have been greater if it had not been for the shortage of vacant properties that played a positive role. Buyer activity was also facilitated by very low interest rates on mortiges, which meant that the number of houses not sold was even lower than in 2019.
The Chief Economist at First American Financial Corporation, said that when analysing the Case-Shiller Index data, one should consider that it reflects average prices for 3 months. He also said: "The Coronavirus was a problem that led to a complete halt to economic activity in March and in April there was no action at all but some changes had already begun in May".
The Department of Commerce has calculated that the proportion of Americans who are homeowners rose from 64.1% to 67.9% in one year, reaching its highest point since 2008. However, the government said that the data may not be entirely accurate, as there were far fewer respondents who answered the questions sent to them as part of the survey during the epidemic.
In addition, due to the fact that the majority of students have gone home during the epidemic, the share of households has decreased. Moreover, in the category up to 35 years of age, the share has risen to 40.6%.
Research by the Federal House of Finance showed that real estate prices increased by 4.9% in one year. In April, prices rose to 3.1% in some cities. Although experts thought the figure would be 4.4%.
