US property bargains can be had, but prices will fall further

As is the case in the UK, the American property market has come to a dramatic halt. With lockdown measures in place and the economy frozen, virtually no one is buying or selling right now.

The situation has been made worse by the gloomy employment figures. In the US, three weeks of disastrous unemployment numbers have seen a staggering amount of over 16 million people added to the jobless total.

The last big housing crisis in the US came from 2006 onwards, as property values plunged by up to a third. This was the worst decline in prices since the Great Depression, but there are fears that the next couple of years could be about to get a lot worse.

Let’s take a look at what the future could hold in store for the American housing market.

Some people are looking for bargains

As with most of the planet, the US is on lockdown right now. Different approaches have been taken by each state, but it is believed that up to 95% of Americans are in lockdown at any given time.

This means that estate agencies are closed and carrying out viewings of properties is incredibly difficult. Yet, there are sporadic reports of bargain-hunters looking for cheap properties.

This is typically someone whose business or income hasn’t been affected, or who has benefited from the current economic conditions. They are looking now on the basis that anyone who wants to sell is probably a distressed seller who might accept a low price.

The historically low interest are helping buyers too, and the Fed will keep them at close to zero until they can see evidence that the country’s economy has weathered the worst of the coronavirus fallout.

A look ahead

The US property market is almost certainly over-valued right now. This has led to suggestions that the fall from the coronavirus effect will be even more disastrous. Some analysts have already predicted that we will see the worst price collapse in 3 decades.

In fact, part of the reason for current high prices is that there are more buyers than sellers. However, it is feared that this situation will reverse once the health crisis is over.

People who have lost their jobs will be forced to sell to make ends meet. Others may decide to sell up in order to move to another part of the country to start again. With fewer buyers able to pay for a property or get a mortgage, prices will go through the floor.

We might also see foreign investors snapping up bargains. It is still an attractive place to own real estate, and it would be no surprise to see a surge of international purchasers taking advantage of the uncertainty.

There are few solid predictions for the future that we can hang our hats on in these times. To put it simply, no one knows what will happen next month or next year. Yet, all of the signs are of a dramatic fall in prices and demand.

Summary

If you are thinking of buying a property in the US then you might be tempted to take advantage of the current chaos. You could probably try to find a way of completing if you tried. However, it seems likely that prices will fall significantly in the near future, so holding off for a while makes sense.