The Factors that could influence Residential home prices across U.S over next 10 years
Created by: Ankit K. Sharma
Last updated: 16th sept 2021
First time home buyers in the United States in 2020, by age group.
SOURCE: Statista 2021
Age Group
Gen Z (born between 1996 and 2010) and Millennial (born between 1980 and 1995) home buyers are mostly first-time home buyers.
The majority of buyers are in the early stages of their careers, or still studying in some cases paying of their student loans
GDP forecasts
SOURCE: Deloitte analysis
Growth in the Economy
With higher economic growth and growing wages, people can spend more on housing, improving application and boosting prices.
In a recession, reduced sales will also stop people from buying, and people who are losing their jobs will fall behind their mortgage payments and end up in their homes repossessed.
Interest Rates on Loans
A high-interest rate can influence the monthly payment for mortgages. This would increase mortgage costs and reduce the demand for a house to be purchased.
This would ultimately decrease the no. of buyers for Residential home.
SOURCE: Nerd Wallet {APR(adjusted-rate mortgage)}
United States Employment Rate
Unemployment
If the unemployment rate of U.S increases with time period, the individual wouldn’t be able to pay their mortgage on time or even buy new home.
This would ultimately decrease the no. of buyers for Residential home.
SOURCE: U.S Bureau of Labor statistics
Working
Population(%)
Credit score
A higher credit score leads to more favorable loan terms, including a lower interest rate. This would increase the buying power for homes.
A lower debt to income ratio favors lower mortgage rates that Individual will be offered.(DTI is calculated as your total monthly debt payments divided by monthly gross income)
Government Policies/subsidies
If the Legislation Provides Tax credits, deductions & subsidies then this can boost the demand in buying home.
As in 2009, the U.S. government introduced a first time home buyer tax credit to homeowners in an attempt to jump-start home sales in a sluggish economy(only those who purchased homes between 2008-2010 were eligible). According to the Government Accountability Office, 2.3 Million people took advantage of the tax incentive.
Conclusion
The factors like Age, Economy, Credit points, Interest rates, Government policies, Mortgage facility can influence the Residential prices in the U.S over the time period of next 10 years.