The world advances amidst turbulence but why are US housing prices hitting new highs?
Although the U.S. authorities have made many efforts to recover the economy, as the two parties competed for elections, the authorities began to neglect the governance of the economy, causing the entire United States to fall into economic recession again. Contrary to the sharp economic contraction, housing prices in the United States have once again experienced strong increases.
The unprecedented monetary easing policy has increased the purchasing power of residents. With the unrestricted and unlimited monetary easing policy of the Federal Reserve, the U.S. dollar has launched an unlimited over-issue model, which is equivalent to an unexpected increase in residents’ income, thereby increasing residents’ purchasing power. In addition, the fixed interest rate of 30-year mortgage loans in the United States has entered a rapid downward adjustment stage, and as of the end of October, it has been at a historically low level. Loose monetary policy and low loan costs have reduced the loan pressure on home buyers, thereby enhancing the purchasing power of houses.
In the context of global monetary easing and continued liquidity, funds prefer to flow to the core areas of cities. Buying real estate in the core area is more favorable at this time. At the same time, it can also be used as an investment to prepare for subsequent housing price increases to make huge profits.
Market supply-demand relationship where supply exceeds demand. The current demand for real estate in the United States is in short supply, which is also an important reason for the rise in housing prices in the United States. According to data, the current US housing inventory is at a historically low level. Although there are construction increasing taking part to supply, but still unable to meet the current demand for more housing.
According to data, the share of US real estate in total GDP is only 6.2%. However, with new supply restrictions, it is difficult for the US economy to rely on the real estate market for economic recovery.
In fact, the rise in US housing prices against the trend is not the case. The recent rise in housing prices in countries including the United Kingdom, Germany, South Korea and other countries is due to the government’s monetary easing policy. Loose monetary policy has increased the purchasing power of residents, and purchasing real estate in the context of economic turmoil is one of the most insurable investments.
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