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US Housing Market Essay

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Good news: The U.S. housing market will continuously thrive regardless of the economy. The homebuilder market has been growing from an amended economy, supporting housing market and rising confidence. The National Association of Home Builders discovered that builder confidence for new single-family homes has risen to its highest level since 2005 according to the Wall Street Journal. The U.S. housing sector is a prime investment opportunity for three simple reasons: 1. Strong job growth and consumer confidence: The U.S. economy has added 2.9 million private sector jobs since 2014, including 736,000 new jobs in the 25- to 34-year-old range, a large portion of first-time buyers. More jobs and higher incomes are expected to increase consumer …show more content…

Willingness to lend and rising demand for credit: Banks are increasing their willingness to lend, households are becoming more confident and many are now able to build-up. Many previously foreclosed homeowners could become eligible to purchase a home within the next five years. As a result, the demand and stream of credit is likely to increase, which should sustain the U.S. housing market. Bad news: The amount of living space in new U.S. homes will shrink. The median size of U.S. homes built in the second quarter declined from the previous, suggesting builders are starting to prioritize producing more entry-level homes. In an effort to accommodate current housing buyers, new houses will be 40 square feet smaller — equaling about the size of a walk-in closet. The National Association of Home Builders estimates that first-time buyers, who statistically purchase entry-level homes, will account for 18% of new-home sales in 2015. This is an increase from 16% in 2014, but incomparable to the share of 25% to 27% from 2001 to 2005. Entry-level buyers tend to lean towards smaller homes. In recent years, many younger people chose to rent homes with hopes of avoiding strict mortgage-qualification criteria, rising student debt, dawdling wage growth and preferences for city living, which has proven to be more

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