Why is American real estate so inflated right now?

In the US, Covid 19 cases seem to be under control and the vaccination rates are rising. The economy looks to be bouncing back. Did you know that in the U.S. real estate industry, housing prices continues to soar without being significantly affected by the pandemic? Why is that?
In this column, we will discuss the state of the US real estate industry and why prices are soaring. 

Are Interest rate factors the reason why American real estate continues to soar？

American real estate has recently been attracting attention for its stability. 
Despite the pandemic, vacancy rates are low, yields are good, and the rent can be raised every year. Due to these factors, more and more overseas investors want to invest in US real estate. 
On the other hand, did you know that the Japanese housing industry is currently experiencing "wood shock" due to soaring prices of imported timber? The construction work of new houses is being interrupted due to lack of timber.
Behind Japan's "wood shock" are the factors at play in the US real estate market. 
Currently in the United States, the number of new housing projects has increased by 30% compared to 2019 (pre-Covid). Why is this happening in American real estate, where pre-owned homes are the mainstream? Behind this is the US interest rate.
American mortgages are now entering an era of historic low interest rates. 
In addition, the number of teleworkers has increased due to the influence of Covid-19,  and many people are relocating to suburban housing.

Is soaring US real estate due to population growth？

The population of the US continues to grow and has increased by 80 million people over the last two decades. However, the population is not growing due to a rise in births. Population growth in the US has been fueled by immigration. In particular, the increasing number of Hispanic residents with many children has a major impact on population growth. 
Increased housing demand due to population growth may be one of the reasons behind the soaring US real estate market. However, the land of the United States is very large, and soaring real estate prices vary greatly from area to area. 
Even in the United States, the soaring price of real estate in Los Angeles, California is remarkable. Although the population of Los Angeles has been declining since 2017, it can be said that prices are rising due to the increase in the number of people moving from San Francisco, which has high real estate prices in the United States.
Dallas, Texas is another example where real estate prices have skyrocketed due to population growth. It can be said that tax benefits are behind the increase in Dallas' population. Texas is an area where you can easily expand your business as there is no corporate tax. Also, because Dallas has good transportation system , it has a great advantage of having a distribution base, and many companies are migrating there.
It is in this way that population growth (in Texas) is due to the gathering of many companies from all over the United States. Of course, it's easy to see that real estate prices have skyrocketed due to population growth.
In addition, the impact of Covid is significant. Due to rise of remote work, more and more people are relocating from apartments to detached houses with gardens. Increasing demand for houses with pools can also be said to be due to the influence of working from home. In particular, demand for houses with pools in the northern area of ​​Dallas, which is popular with family households, is high, and supply shortages continue.
Compared to California and New York, where real estate prices are high, real estate in Texas is attractive because it is affordable. Texas is also steadily vaccinating its population and its economy is recovering. 
As mentioned earlier, the influx of many companies and workers from other states may have led to population growth. High real estate prices in Dallas, Texas is expected to continue. 
When considering investing in US real estate, it's a good idea to look at areas of increasing population.

Other than Dallas, Texas, there are many growing cities in the United States, and the following cities are recommended for real estate investment:

●Los Angeles, California 
●Orlando, Florida 
●Jacksonville, Florida 
●Atlanta, Georgia 
●Kansas City, Missouri 

Is the soaring price of American real estate due to factors regarding land? Or does it have something to do with the country as a whole?

Historically low interest rates and immigrant population growth may be reasons why U.S. real estate continues to soar.
However, the reason behind the soaring price of American real estate is thought to be the unique land and national characteristics of the United States.

Economic Recovery

Just as Japan experienced a real estate bubble, there was a time when a real estate bubble occurred in the United States in the 1980s as well. Texas, California and the Northeast all experienced a surge in real estate prices, however they soon dropped after a few years. Localized price hikes may be considered to be a bubble, but this time, the rising price trend in US real estate has a different pattern. During the bubble of the 1980's, rising prices had a tendency to be localized but this time, the whole of the US is seeing a general rise in land prices. Although the world economy took a huge hit with the subprime loan crisis and the Lehman Shock, the US economy has rebounded admirably with the growth of IT companies such as Apple. Not to mention the growing number of Start Ups in Silicon Valley. Such a huge growth in business also fuels the demand for housing and leads to rising land prices. 

Americans aren't as attached to their homes

Japanese people tend to like and stay in the place where they were born and raised. Even young people who moved to Tokyo tend to return to their homeland after getting married. And unless it is a work transfer, people don't move around the country looking for jobs. There have been a few Japanese people who travel the world and work but they are very rare. 
Due to the pandemic, the number of people who move into monthly furnished apartments have fallen. Monthly furnished apartments were rising in popularity among Japanese but has dwindled due to the pandemic. 

However, Americans don't tend to stay in the place where they grew up and readily move to wherever opportunities exist.  Moreover, unlike Japan where demand for new construction is high, the real estate market in the U.S. is mainly about buying and selling pre-owned homes. Japanese tend to live in the house they bought until old age but Americans move houses and areas depending on changes in their lifestyle. In other words, the active and fluid housing market is one of the reasons why US real estate is soaring.

Renovations are the norm

In Japan, the moment a new house is sold, it starts decreasing in value. It is normal for only one, or at the most two, generations to live in the same house before it is demolished.  It is therefore difficult to find a used house in good condition. However, it is not unusual for homes to come on the market that are 100 years old. Americans tend to regularly maintain and renovate their homes so that someday they may sell it and move on to another house or area. Therefore some houses that are a hundred years old may have more value than newer houses. 

Conclusion

In this article, we discussed why the US real estate market continues to soar. Factors include but are not limited to historic low interest rates, population growth, and the uniqueness of American attitudes towards their homes. 
When considering buying land in the US, we recommend choosing an area that is experiencing population growth. And it is also a good idea to take advantage of the low interest rates!