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Lack of Supply and Existing Demand Push Costs in U.S. Housing, Experts Says

Posted by Vanilou Jane Gucor on Jan 29, 2016 12:41 PM EST
New Home Sales Rise To Highest Levels In Six Years more big
Caption:NOVATO, CA - JANUARY 27: A for sale sign is posted in front of a newly built home on January 27, 2015 in Novato, California. According to a Commerce Department report, new home sales surged 11.6 percent in December, the highest levels in six years. (Photo : Justin Sullivan/Getty Images)

Sam Zell, founder of Equity Group Investments, is well known in the commercial real estate market. In a recent interview with Global Real Estate Experts, he discussed the current state of U.S. housing market.

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He said, "If you look at the world as I look at it, and you look at the pricing that is currently available in the commercial real estate market, it's very hard not to be a seller."

He also said that EGI is only executing its plan, and they are doing it through liquidating their "garden apartments." The visible difference being that they made it happen at the same time, instead of in 4-5 years as planned, because Zell believed that "the market could absorb." 

Zell emphasized that there is a lack of supply while the demand is increasing, and this is the cause of the soaring price rates.

In line with this, Ralph McLaughlin, Trulia's chief economist for the real estate hub, told the U.S. News in an email, "This [annual gain] reflects a slow but steady increase in demand from homebuyers as well as increasing confidence of homebuilders."

"[It's] also a positive sign for the U.S. economy headed into 2016, as new home sales leads to new construction and consumer demand for housing-related goods and services," he added.

On the other hand, Stifel Fixed Income's chief economist Lindsey Piegza wrote in research paper S&P Dow Jones Indices, "The subsequent rebound in sales at year-end supports the notion the industry is now appropriately adjusting to the new regulations, resulting in closures of delayed sales as opposed to cancellations."

Miss Piegza mentioned that, "Furthermore, with the threat of rising rates and possibly less favorable financing options in the near term, some lenders are reporting consumers are eager to jump into the market and take advantage of historically low rates—despite having the last seven years to do so."

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