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Demand for single family homes in the US rising
Over three quarters of households in the US would purchase a single family home if they were to buy in the next six months, and 79% of renters would choose to buy outside of an urban area, new research shows. The latest quarterly consumer survey from the National Association of Realtors also shows that confidence about now being a good time to buy is waning amongst renters, particularly in the West where prices have solidly risen. Some 85% of current home owners and 75% of renters said they would purchase a single family home, while only 15% of home owners and 21% of renters said that would buy in an urban area. Lawrence Yun, NAR chief economist, said that the survey findings call attention to the glaring need for more supply of single family homes. ‘The American Dream for most consumers is not a cramped, 500 square foot condo in the middle of the city, but instead a larger home within close proximity to the jobs and entertainment an urban area provides,’ he explained. ‘While this is not a new discovery, supply and demand imbalances and unhealthy levels of price growth in several metro areas have made buying an affordable home an onerous task for far too many first time buyers and middle class families,’ he added. According to Yun, it’s time for home builders to double their focus on constructing single family homes. With millennials increasingly buying in the suburbs tight inventory and affordability concerns will likely worsen without significant headways made in housing starts in relation to job creation. The survey found that 82% of home owners believe now is a good time to buy, no change from the previous survey in December 2015 but the number of renters thinking the same fell from 68% to 62%. ‘A high number of home owners are expressing that it’s a good time to buy and this sentiment is no doubt being fuelled by the $4.4 trillion in housing equity accumulation in the past three years,’ said Yun. ‘On the other hand, accelerating home prices and the perceived difficulty in obtaining a mortgage appears to be tugging at the confidence of renters,’ he pointed out. Overall, respondents over the age of 65, those living in the Midwest and those with incomes over $100,000 were the most optimistic about buying now. Among current home owners 56% thought it is a good time to sell compared to 61% in the fourth quarter of 2015. Amidst steep price increases and tight supply, respondents in the West were the most likely to think now is a good time to sell, while also being the least likely to think now is a good time to buy. Among all households in the survey, less than half believe the economy is improving at 48%, down from 50% in last quarter’s survey. Renters, those living in urban areas and respondents with lower incomes were the most optimistic. Across all age groups, when asked… Continue reading
Survey reveals how prospective UK first time buyers worry they will never own a home
Almost half of people in the UK who have not bought their own home by the time they are in their mid-30s doubt that they will ever be able to do so. First time buyers are increasingly being squeezed out of the housing market despite a strong desire to own a new home which is regarded as a sign of social and financial security. New research commissioned by Yorkshire Building Society has found that 49% of non-home owners aged 35 to 40 who aspire to home ownership think that it is ‘unlikely’ or ‘very unlikely’ that they will ever own a property. The survey, conducted by NatCen Social Research, found that 69% of young adults aged 18 to 40 felt that owning their own home was crucial to feeling that they had succeeded in life, as well as a source of social and financial security. However, the importance that young adults placed on home ownership was not matched by equal levels of optimism about their ability to achieve this milestone, particularly among older respondents. The research thus suggests that an inability to buy a home is leaving many young Britons facing an ‘early life crisis.’ ‘It is very sad to see how the hope of owning a home is fading for so many, especially as people approach their mid-thirties. For most people, owning a home is not just about security, it is also evidently integral to their feelings of self-worth, success and self-esteem,’ said Andy Caton, executive director of Yorkshire Building Society. ‘Hundreds of thousands of adults across the UK feel unable to reach this important milestone in their lives, with many reaching the conclusion that they will never be able to buy their own home like their parents and grandparents did,’ he added. The survey found that while 69% want to own a home some 45% didn't think they were earning enough money to be able to buy their own place, while 46% worried they wouldn't be able to afford mortgage repayments and 38% can’t afford required deposit. One in 10 people claimed that lack of job security was preventing them from pursuing their dream of owning their own home. Some 31% of non-home owners aged 35 to 40 have given up on ever buying, saying that they don’t think they will ever be able to afford to buy. This is equivalent to around half a million people across the UK expecting never to be able to afford to own their own home, unless there is a dramatic downward shift in house prices. Latest UK house price figures show that property values have risen to a record high, with the typical first time buyer paying 7.1% more than they would have a year earlier. Indeed, the average price paid for a starter home in the UK is now around £219,000, meaning that, with a deposit of 10% buyers would need a salary of around £45,000 a year to get their first step on… Continue reading
Nonstandard UK home borrowers now more likely to get a loan
More mortgage borrowers are seeing their applications for mortgage loans given the green light as new products emerge to support ‘non-standard’ circumstances, according to new research. Some 26% of brokers reported having no problems sourcing a mortgage for any type of borrower in the second half of 2015, the highest proportion in the post Mortgage Market Review (MMR) era, and a clear sign of improving lending conditions. According to the Intermediary Mortgage Lenders Association (IMLA) report it represents a significant jump from the proportion of brokers experiencing no problems both in the first half of 2015 when it was 15% and the second half of 2014 when it was 16%. However, some areas beyond the ‘mainstream’ mortgage market have been less well-served since 2008/2009, with new regulations introduced to govern lending criteria and fewer products on offer tailored to meet the needs of smaller and less mainstream consumer segments. This includes products to support borrowers seeking lending into retirement, products designed for borrowers with past adverse credit records, and those tailored for self-employed borrowers or those with irregular incomes. However, the IMLA’s research shows fewer brokers are now experiencing problems with sourcing a mortgage for clients in all of these areas, with the most significant improvement seen in sourcing loans for interest only borrowers. The proportion of brokers having difficulties helping this type of client has fallen 15 percentage points year on year to 39%. Similarly, the proportion of brokers unable to source a mortgage for ‘lending into retirement’ borrowers has dropped seven percentage points to 43%. The picture has also improved for self-employed borrowers, with just 40% of brokers reporting problems over the last six months, down six percentage points from a year ago. The most common circumstances where brokers were unable to source mortgages in the second half of 2015 continue to be adverse credit at 46%, lending into retirement at 43%, self-employed at 40% and interest only borrowers at 39% although in each case, the picture has improved. The report points out that these product types are becoming increasingly important, in context of the changing UK demographic. More first time buyers are taking out mortgages with longer terms to spread out their repayments, with 60% now opting for terms that last more than 25 years, meaning more borrowers could be left paying off their debt in retirement. Meanwhile the trend towards more working flexibility alongside sluggish wage growth has boosted self-employment levels in the UK, and 15% of the workforce are now self-employed. Looking ahead, both lenders and brokers identify first time buyers as the market area with the best overall growth prospects for 2016, ahead of other segments. However, when asked about the prospects for product availability, IMLA’s research suggests further improvements could be on their way for other borrower types. More than half of lenders forecast an improvement in mortgage availability for retirement borrowers, near prime borrowers, those who are self-employed or with irregular incomes, and interest… Continue reading
