Apartment prices in the US have fallen in the past year and they will continue to fall – many economists in the US estimate. In practice, the Case-Shiller index, which estimates housing prices in 20 states in the United States, recently showed that the monthly declines exceed 1%. These numbers only started in the last six months but they express a drift as more and more areas see declines.
The reason for the drop in apartment prices in the US is clear and well-known – the interest rate. The interest rate affects the supply of apartments when the contractors go into a state of hold on the construction plans, against the background of the increase in financing expenses and the fear of the slowdown and recession. And the fear of an economic crisis. All this while we now estimate that we are at the end of the rise in inflation and soon we will also see the interest rate stop, but it will take time and at this time, there is great uncertainty, and people are sitting on the fence.
At the same time as the slowdown in inflation, the effect on the mortgage decreased, but it is still above 6%. This is a high figure that reflects a large increase in mortgage repayments compared to the situation a year or two ago. And against this background, the forecasts of economists in the American market are for a decrease in apartment prices. By the way, this is the opposite of the situation after the corona. Towards the end of the epidemic period there was a seller’s market. There were several offers for each apartment. The demand for apartments was great and the supply was small and people bid on a large number of apartments to buy an apartment. The distance between advertising and actual sale was less than 2 months, today it is over 3 months.
According to the popular opinion, the weakness in apartment prices will continue into 2023 and may also reach 2024, when there are many analysts who estimate a 10% decrease compared to the peak in mid-2022. The optimistic economist-analysts also believe that there will be a decrease, although a more measured one of a few percentages.
Another reason for the expected declines is the stock of apartment houses which has increased greatly in the last year. This inventory means that the market has become a buyers’ market and not a sellers’ market.
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