Are you planning to sell your house in the USA quick? Or maybe, like many others, you are wondering if this is the right time to buy a house in the USA online. Regardless of what your objectives are, you should be watching President Donald Trump very closely, as his actions can make a huge difference to the US housing market.
President Trump, if we are being honest, hasn’t really paid a lot of attention to the housing market. Much of his attention has been taken up by the politics in the country.
Nobody quite knows what to make of Trump – is he a visionary leader and protector of American interests, as his supporters say he is; or is he the worst thing to have happened to the United States ever, if you were to believe his detractors.
As we all know, no American President has dealt with the sort of vicious attacks from the media and the opposition as Trump has. But we are not really focused on the politics in the United States – that is beyond the scope of this website.
Our sole focus is on the overseas property market. So, let us analyse the challenges in the US property market that President Trump has to deal with at some point, when he gets some time off from all the politics in Washington.
First, the property market is pretty much back to the pre-crisis levels. Things look attractive again for those who have property for sale in the USA. But it is not so simple.
While home prices are on the up, homeownership is falling. Indeed, homeownership is falling because home prices are up. For first time homebuyers such as Millennials, buying a home simply does not make sense when renting an apartment is a much cheaper option.
So, the rental market is on the up, rising much faster than the housing market. The huge demand for rental properties is pushing home prices even higher. This has made it very difficult for someone young to buy a home in America.
What could the government headed by President Trump do about this? We don’t believe in any intervention by the government in the housing market, as that always leads to the skewing of the market conditions in favour of some parties and makes things more difficult for the rest of the population.
However, the government can help by not relinquishing control over the Freddie Mac and Fannie Mac, as they still hold residential mortgages of 70 percent of homeowners. The government can also help by enhancing the role of the Federal Housing Administration, which has been a great support to home seekers from low income households.
First time buyers need to be encouraged to buy property, but the recent actions of the Federal Reserve, which has been gradually increasing the interest rates, certainly do not help.
There is no question that interest rates are too low and need to increase, but hopefully this is done in a calibrated manner, so that it does not discourage first-time home buyers.
These are the challenges in the US housing market that the President should address.