The USA remains in a seller’s market, but property price growth is beginning to slow, so where are the areas where overseas property investors can still look forward to sustained property price growth?
Just a handful of metro areas posted higher property prices for each of the 16 months from January 2018 to April 2019, according to data from CoreLogic. The other housing markets have seen prices fluctuate – or in some cases retreat – during that time.
In spring 2018, the USA was really a seller’s market with little supply and strong demand, says Frank Nothaft, chief economist at CoreLogic. ‘Market conditions changed dramatically going into this year, that’s why we’ve seen a slowdown.’
Nationally, the USA has not seen a monthly decrease in home prices since January 2018, according to CoreLogic’s Home Price Index. However, property price growth slowed several months during the first half of 2019.
The median property price in the US climbed 3.9 per cent from $245,300 during first quarter 2018 to $254,800 in first quarter 2019, according to the most recent numbers from the National Association of Realtors.
Strongest Markets for Property Price Growth
Sustained property price growth has continued in two major metros: Las Vegas and Phoenix, according to CoreLogic. These two areas were among the hardest hit during the financial crisis a decade ago.
The mid-size communities in and around Colorado Springs, Colorado; Greenville, South Carolina; and Knoxville, Tennessee have also seen their real estate markets remain hot.
The median property price in the Las Vegas metro jumped more than 10 per cent from $270,200 in first quarter 2018 to $298,900 in first quarter 2019, according to the data from the National Association of Realtors.
The economy is booming in and around Las Vegas as evidenced by the stadium being built for the Las Vegas Raiders and Amazon hiring for a new fulfilment centre in North Las Vegas.
Average property prices in Phoenix recently passed where they were before the Great Recession, says Mark Stapp, the Fred E. Taylor professor of real estate at Arizona State University.
The Phoenix area saw prices go up nearly 6 per cent from $261,100 in first quarter 2018 to $276,400, according to the National Association of Realtors.
In addition to the hot markets of Las Vegas and Phoenix, other metros are signalling strong property price growth.
Sixty-three of the 178 markets NAR has data for showed an increase in property price growth from fourth quarter 2018 to first quarter 2019. The major metros below posted the largest quarter-over-quarter increases, according to NAR.
Richmond, Virginia (up 4 per cent)
Des Moines-West Des Moines, Iowa (up 4 per cent)
Denver-Aurora-Lakewood, Colorado (up 1.9 per cent)
Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin (up 1.6 per cent)
Seattle-Tacoma-Bellevue, Washington (up 1.5 per cent)
Nothaft commented: ‘If mortgages rates stay below 4 percent for next several weeks or next several months that’s going to be a real shot in the arm to the homebuying market because it makes homebuying more affordable than it was a year ago,” he says.
‘Waiting on the side-lines hoping for home prices to go from slowly increasing to declining likely doesn’t make sense in areas where inventory remains tight, demand remains strong and the cost to deliver homes is increasing.’
It seems that there is still opportunities for overseas property investors to enjoy property price growth in the USA, you just need to know where to look.