The US housing market is “furious”, says real estate analyst, and could plunge “down the drain”.
“If you don’t know what to do with your money, you’ll find yourself in a situation that is going to be very, very dangerous,” he says.
In the first half of the year, the US had the most rapid growth in new homes and sales in more than a decade, but many of those were sold off, he says, while others have been purchased by people who are moving in with their parents.
“The average person who buys a house is a 30-year-old, college-educated guy who is living in a one-bedroom apartment.
He says this is an “epidemic” that is spreading rapidly in America. “
If that house starts to sell for a third of its value, it’s going to go to somebody who’s not going to want to live there.”
He says this is an “epidemic” that is spreading rapidly in America.
The number of home sales in the US, which had risen for almost a decade until the recession began in 2007, rose by 5.2% in the first three months of this year, a 10% increase from the same period last year.
But there are signs the US housing recovery is faltering, with a third drop in home sales from December to February.
“I think this is going into a much larger-scale, more protracted downturn,” Mr Zirnstein says.
“That’s the biggest risk.”
There are also signs of an emerging trend of people not wanting to own property, with the number of people who say they have sold their home at least five times jumping from 9% in February to 18% in March.
This may be because many of the buyers are renters or homeowners with children.
In a recent report, real estate firm RealtyTrac found that median prices in some US cities are more than $600,000 higher than in other parts of the country, a number that has been on the rise for years.
“It’s a pretty good sign,” Mr Trickel says.
He points to the fact that the number one reason people are not buying their own home is because it is a “risky investment”.
“You need to be a pretty prudent person if you’re buying a house,” he explains.
“I don’t think that there’s anything inherently wrong with the property itself, and I think that we need to do a better job of educating people on how to use that money wisely.”
The biggest reason for the increase in sales, he believes, is that the housing market has been fuelled by high prices, particularly in California.
“There are certain markets that have seen an enormous surge in the last couple of years that have created an appetite for real estate,” he adds.
“And if you look at the prices for a lot of the properties, I don’t see anything particularly anomalous in that.”
“The number one thing that is happening right now is the number and variety of properties that are being sold,” he continues.
“We’re seeing a huge spike in the number.”
In his view, the real estate industry is now in the midst of a “greatly exacerbated” bubble, which has caused the US to become “the housing capital of the world”.
Mr Trickell points to a number of recent trends, including the US becoming the first major economy in the world to see an increase in homeownership rates, as well as a rising number of young people buying homes.
“There’s this whole shift of people wanting to live in a house, wanting to move into a home and want to pay for it, and it’s not just the young people,” he said.
“Many people are buying homes for their kids or grandkids, and they’re renting them.”
Mr Zirnsstein says that, although many people are “totally happy” with their current financial situation, the country is now facing an “extremely difficult time”.
“It’s becoming very clear that the current housing bubble will burst in less than five years, and that we will be in for a long period of time,” he concludes.
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