US house prices have experienced an extremely strong rebound from the depths of the financial crisis in 2007-2009 with new highs now being reached.
The housing market has been helped by the country’s longest economic expansion in its history (121 consecutive months reached in July 2019), with the average house price in the USA now 4% above the peak reached in 2006.
Mortgage debt reached a new record high in 2019 of $9.406 trillion – surpassing the $9.294 trillion peak in the third quarter of 2008. However, incomes have also risen, lending standards are tighter and delinquency rates have also fallen. This means that although there are pockets experiencing high and rising price levels, fears about a housing bubble in the USA remain small at present because the combination of rapid price and debt growth along with expanding supply seen in some places in 2006 is not being repeated.
Furthermore, unlike in the run up to the US recession, there are few places where property prices have remained high or even risen in the face of increased supply.
The more buoyant market has encouraged the flow of transactions and enticed investors too. In 2018, the number of properties bought and sold again within a two-year period reached its highest point at 11.4%, while since June 2009, single-family rents have increased by a third in the US.
One key factor propelling the economy that has helped the housing market too has been record low interest rates, which have led to the longest stretch of mortgage rates below 5% in more than 60 years.
For any overseas investors considering buying a property in the US, the recent strength of the dollar will be an important factor to consider, but the appeal of the US market and the strength of the drivers supporting it still make it a compelling proposition.