Greg Khojikian is the founder and CEO of GFF Brokers and has over 20 years of experience in the futures and Forex market industry.
When most of the world’s economies retreated to quarantine through government blockades, the inventory market reacted, jobs were lost, and many corporations linked to physical locations were brought to a halt to the maximum. The specter of an economic depression is also looming on the horizon.
Transportation and energy demand were declining. Demand for discretionary customer products, such as cosmetics, also declined. But space costs, a much-appreciated detail, have risen unexpectedly. Many other people didn’t expect this trend because of the millions of people who have lost Add to those two consecutive quarters (Q1 and Q2 2020) of falling US GDP. USA Talk about how to counter the expected trend.
So with millions of other people out of work, with business closures, and with a pandemic that didn’t come at first with a transparent endpoint, how come there were enough buyers to constantly drive asset costs “through the roof,” to speak?
The US market
No wonder the answer is in the fundamental precept of source and demand: According to the U. S. Census Bureau. In the U. S. , 64% of all homes were owner-occupied in the United States in 2019. Homeownership is a component of the American dream.
In early 2020, the immediate fall in employment, the recession that remained, and the uncertainty looming over the overall economic outlook would possibly have led many to space costs falling and on a trajectory similar to that of the 2008 currency crisis. . Crisis, when space costs fell by 33% in the recession that remained, according to CoreLogic.
Instead, low lending rates and the long-held shortage of housing sources in many spaces would have led homebuyers to raise asset costs, causing housing costs to skyrocket. In April 2021, we saw an annual increase in housing costs of 14. 6%, according to the S Index.
European Real Estate
Across the European Union, space costs increased by around 5. 2% in the third quarter of 2020, GDP fell by 11. 9% in the last quarter of 2020.
The house has become the new virtual office for Europeans and Americans, which has given millions of people a new attitude about the capacity of their living area. However, supply has remained sluggish in many regions as costs rise. Institutional investment would possibly also have served as a major tailwind for the upward trajectory of European asset costs; According to the knowledge of Real Capital Analytics (through Deutsche Welle), institutional investments in European real estate reached a new high in 2020 and accounted for 30% of total acquisitions.
What’s next and why are investors careful?
Apparently, the increase in the value of pandemic homes that turns out to stun investors is no mystery at all; it turns out to be a matter of source and demand, more precisely, strict source rather than an on-demand attack. noticed an accumulation in the value of assets with low borrowing costs. Where else will the value pass if not?
According to a CNBC report, the source of housing in the U. S. USA It declined in May 2021, still at an all-time low. Are those symptoms that upward cost pressure can simply alleviate?
What happens next remains a mystery, as any slight change in the dynamics of the economy can translate into larger-scale outcomes that are easily predictable.
It is vital that investors keep an eye on the housing market as it is one of the many points that can help gauge the strength of the economy. As a licensed forex and futures broker and owner of a brokerage firm, I am well aware of the interaction between other markets and sectors. Fluctuations in the housing market can have effects or involve movements in other markets, sectors and asset classes, adding commodities (such as timber and copper), assumptions about sector index funds and even dividends and corporate debt (such as REITs and bonds). I advise my clients to pay attention to primary economic reporting, as government advertising and economic knowledge publications can occasionally have a “cross-market” impact, directly or indirectly.
The data provided herein are not investment, fiscal or monetary recommendations. You consult an authorized professional to recommend you in relation to your express situation.
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Greg Khojikian is the founder and CEO of GFF Brokers. He has over 20 years of experience in the futures and Forex market industry. Read Greg Khojikian’s full control profile
Greg Khojikian is the founder and CEO of GFF Brokers. He has more than 20 years of experience in the futures and Forex market. Read Greg Khojikian’s full profile here.