Tag Archives: crisis
Foreclosed homes in US increased in value almost twice as much as others
Homes that were foreclosed during the housing crisis in the United States have gained almost twice as much value as other homes, according to a new analysis. But the original owners of those homes have not benefited from that recovery as low end homes were much more likely to be foreclosed, the report from real estate firm Zillow shows. It explains that during the run-up to the housing bubble, many low income earners bought homes, and the home ownership rate rose from about 65% in the middle of the 1990s to almost 70% in 2006. However, when home values crashed in 2007, millions of home owners had to walk away, abandoning their initial investment and missing the opportunity to gain equity as home values recovered. It also points out that the rich-poor divide is growing in the US. In 2000 high income households made an average of six times as much income as the lowest third of households. In 2015, the top third made nearly seven times as much as the lowest third. Of all foreclosed homes, some 46.7% were among the least expensive third of homes. Only 16.6% were among the most expensive third. Foreclosed homes gained value faster than other homes, and in many markets, are more valuable now than they've ever been. Since the lowest point in the housing bust, the average US home has risen 22% in value, while the average foreclosed home has risen 39% in value. The report suggests that in many cases, investors bought foreclosed homes and converted them into rental properties, benefiting from the recovery as home values bounced back. The percentage of single family homes being rented out has risen from 13% to 19% over the past decade. ‘Income inequality is an important topic in the US right now, because the gap between the richest and poorest Americans is growing,’ said Zillow chief economist Svenja Gudell. ‘Many lower income Americans lost their homes during the foreclosure crisis, forcing them to pay ever increasing rents and locking them out of the benefits of the housing market recovery,’ she added. Meanwhile, a separate report from the National Association of Realtors shows that at a national level, housing affordability is down from a year ago as higher prices continue to outpace household income growth. Housing affordability declined from a year ago in April pushing the NAR index from 167.5 to 162.4. The median sales price for a single family home sold in April in the US was $233,700 up 6.3% from a year ago. Regionally, all four regions saw declines in affordability from a year ago. The Midwest had the largest decline of 5.6%, the South had a decline in the affordability index of 3.4%, followed by the West with 2%. The Northeast had the smallest dip in affordability at 1%. By region, affordability is down in all regions from the previous month. The Midwest with a fall of 6.2% had the biggest decline, followed by the South and West… Continue reading
New property listings fall in UK with Brexit affecting the market
Some 68% of UK towns and cities saw new property listings fall in June, with supply down 13% in London alone, according to the latest property supply index which suggests Brexit is to blame for the decline. Lichfield and Winchester registered the biggest drop in supply in June, with new property listings down 37% and 36.5% respectively, the index from online estate agents HouseSimple shows. It also reveals that four of the top 10 biggest fallers in June were in the South of England and although the majority of areas saw supply levels fall in June, there were a few areas that bucked the trend. The biggest risers in June were the Scottish towns of Inverness and Stirling, where new property listings were up 30.5% and 18.5% respectively. Out of the top 10 risers, half the towns were in the South of England. In London new properties listed across the capital fell by 12.8%, following a fall of 2.4% in May. Wandsworth and Waltham Forest saw the biggest drop in supply, both down 34.9%. This follows a big rise in supply in both these boroughs in May, with new property listings up 9.5% in Wandsworth and 31% in Waltham Forest. Only five out of 32 London boroughs saw an increase in supply last month, with new property listings in Barnet up 11.4% in June and Barking and Dagenham up 8.8% leading the way. ‘Fear and uncertainty over the Brexit vote definitely had an impact on buyer and seller confidence in June, with many sellers holding off putting their properties on the market until the result was known,’ said Alex Gosling, chief executive officer of HouseSimple. ‘Now we know, and although the decision has come as a bit of a shock, at least a degree of uncertainty has been taken out of the equation. The property market can now roll up its sleeves and get on with it. Nothing has fundamentally changed overnight and people still need to buy and sell homes whatever the market conditions,’ he explained. ‘We still have a supply shortage, and this may well counter any fallout from Brexit. There were concerns about the London market faltering, but demand is still strong in the capital and the weak pound should attract foreign investors looking to pick up bargains, particularly at the top end of the market,’ he added. ‘For the rest of the year, we may see a small dip in prices as there are choppy seas ahead, but it’s certainly not the end of the world levels predicted by some doom-mongers. Supply should hopefully edge up, as fears around the impact of Brexit dissipate, and sellers feel more confident about market conditions and the wider global economy,’ he concluded. Continue reading
Home lending in the UK increased in May, latest CML data shows
Home owners in the UK borrowed £9.4 billion for house purchase, up 15% month on month and 8% year on year in May, according to the latest data. They took out 53,800 loans, up 13% on April and 5% on May 2015, according to the Council of Mortgage Lenders which said that some equilibrium is coming back into the home lending market. A breakdown of the figures show that first time buyers borrowed £4.3 billion, up 10% on April and 23% on May last year. This equated to 27,500 loans, up 9% month on month and 16% year on year. Home movers borrowed £5.1 billion, up 19% on April but down 2% compared to a year ago. This represented 26,300 loans, up 18% month on month but down 5% on May 2015. The data also shows that remortgage activity totalled £5.2 billion, down 15% on April but up 30% compared to a year ago. This came to 30,900 loans, down 12% month on month but up 25% compared to a year ago. Landlords borrowed £2.6 billion, up 4% month on month but down 4% year on year. This came to 16,600 loans in total, up 3% compared to April but down 8% compared to May 2015. ‘There was a sense of the market regaining some equilibrium in May, following the stamp duty driven spike in March and the subsequent dip in April,’ said Paul Smee, director general of the CML. ‘For the second month running, first time buyers borrowed more than home movers, the first time in 20 years that this has been the case. Buy to let continues at lower levels as expected, after the change to stamp duty,’ he pointed out. However, he also pointed out that Brexit, and its likely effect on the market, is a question to which the answer will not immediately be forthcoming. ‘Lenders will continue to be open for business as usual, but lending volumes may be affected by uncertain consumer sentiment,’ he added. The CML report also shows that affordability metrics for first time buyers have remained relatively stable. The typical loan size increased to £131,000 from £130,000 in April, while the household income of borrowers also increasing slightly from £39,700 in April to £40,000 in May, which meant the income multiple went up from 3.46 to 3.51. Home movers showed a similar trend with the average amount borrowed increasing to £166,000 from £163,000 in April, and the average household income of a home mover also increasing to £53,300 from £52,500. This meant the income multiple went down from 3.26 to 3.25 month on month. Remortgage lending saw a month on month decrease in May but a year on year increase by both volume and value, reaching levels similar to those in the first three months of the year. Gross buy to let lending continues to be lower than usual as expected after the surge in activity to beat the stamp duty changes on second properties ahead… Continue reading
