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Homes to buy are more affordable in many US metros than renters think, research suggests
Home ownership in the United States has slowly fallen in recent years to currently its lowest level since 1965 but new research from the National Association of Realtors suggests that could be halted. The research shows that there are many affordable metro areas and a large segment of current people who rent their home earn enough income to qualify to buy a property. NAR reviewed employment growth, household income and qualifying income levels in nearly100 of the largest metropolitan statistical areas across the country to determine which areas with employment gains above the recent national average also have the largest share of renters who can currently afford to buy a home. Of the top 10 metro areas with the highest share of renters who earn enough to buy, nine were either in the South or Midwest, including three cities in Ohio. Lawrence Yun, NAR chief economist, pointed out that there has been a significant increase in renter households both among young adults and those who lost their home since the economic downturn, especially in metro areas that have seen robust job creation and a resulting influx of new residents. ‘Even in a time of expanding home sales, steady job growth and historically low mortgage rates, the homeownership rate recently tumbled to its lowest level in over five decades as many renters struggle to juggle escalating rents without commensurate income gains,’ he said. ‘However, this new study reveals that there are several affordable, middle tier markets with solid job gains and a large segment of renters who earn enough to buy,’ he added. The top 10 metro areas highlighted in NAR’s study were all outside of the West Coast and each had a share of renters who qualify to buy that was well above the national level of 28%. Top is Toledo in Ohio and Little Rock in Arkansas both with 46%, followed by Dayton in Ohio at 44%, Lakeland in Florida, St. Louis in Missouri and Columbia in South Carolina all at 41%, Atlanta at 40% and then Columbus in Ohio, Tampa in Florida and Ogden in Utah all at 38%. According to Yun, it's no surprise that many of the markets with the most renters qualified to buy are in the Midwest and South. The median existing home sales price in these two regions continue to be lower than the Northeast and West, and while many of these areas were slower to recover from the recession, improvements in their local labour markets in the past year have pushed their hiring levels to at or above the national average growth rate. ‘Overall housing affordability and local job market strength play a pivotal role in a renter's decision on whether to buy a home or sign another lease. The good news is that other recent NAR survey data shows that those residing in the two regions were the most likely to say that now is a good time… Continue reading
Rents still rising across most of UK but growth is slowing
Average residential rents in the UK continued to rise in July with demand still more than supply but the rate of growth is slowing, the latest index data shows. Excluding Greater London the average rent agreed is now £779 per month, some 2.3% higher than a year ago while the average rent in London is now £1,599 per month, up 4% over the year. The growth has continued since the beginning of the year and the outlook remains strong despite the growth slowing, says the rental index report from HomeLet. The data suggests that landlords have been able to continue securing higher rents on new tenancies despite the economic uncertainties created by the UK’s vote to leave the European Union in June. It mirrors data from the housing market, with mortgage lenders also reporting modest growth in house prices in the month following the Brexit vote although many agree that is still too early to measure what affect Brexit sentiment has had on the market. Looking forward, the fundamental forces in the private rental sector remain unchanged, the report suggests with Britain’s growing population, the relative unaffordability of house prices, and the lack of new homes being built combined with the reduction in social housing suggest that the private rental sector will continue to be an ever important source of homes in the years and decades to come. A breakdown of the figures show that there is considerable regional variation recorded by the index. Month on month rents increased the most in East Anglia with a rise of 3.7% and the region also topped the annual growth with a year on year rise of 9.7%, taking the average to £897. But rents fell by 3.7% month on month in Scotland but are up 1.4% year on year to an average of £676. The only other region to see a month on month fall was the North East with a decline of 0.4% to £537 and a year on year fall of 5%. Year on year rents have fallen in the South West by 2.1% but are up by 0.7% month on month to £894 and by 0.5% in the North West to £660 but the region has seen month on month growth of 0.5%. Ultimately, rents will be determined by supply and demand in the private rental sector, according to Martin Totty, chief executive officer of HomeLet’s parent company Barbon Insurance Group. ‘Population growth will continue to increase demand, and that the housing stock isn’t growing quickly enough to meet that demand. However, with rents ultimately limited to a tenant’s ability to pay, rents are likely to continue to climb, albeit at the slowing pace noted most recently,’ he said. ‘We won’t know exactly how Brexit is impacting the private rental sector and it will be several months yet until we see some clearly established trends in the marketplace. It seems likely that with lenders concerned about the prospect… Continue reading
Price of a home for first time buyers in England up 28% in last four years
First time buyers in England are now paying out an average of just over £196,000 for their home, a rise of £42,451 or 28% over the last four years, new research shows. Over the same period the average house price has increased by 26%, highlighting the ever growing obstacle many first time buyers face getting onto the housing ladder, according to the report from hybrid estate agent eMoov. The situation is harder in London where the current price paid on average by first time buyers is £462,602, by £54% since up 2012 while at £86,116, County Durham in the north east of England offers the best value for those looking to get on the property ladder. Durham has struggled in recent times where the property market is concerned, with low demand seeing prices drop, although this has at least benefited first time buyers in the area, the report says. But prices have increased by just 3% or £2,600 since 2012, the lowest across England. In London even the top five most affordable boroughs have average house prices for first time buyers well above the UK average. The most affordable at £254,600 is Barking and Dagenham, followed by Havering at £281,836, Bexley at £285,464, Croydon at £301,001 and Sutton at £312,978. In 2012 the average first time buyer price for each borough was below £200,000, but since then first time buyers in each of these five boroughs seen an increase of between £95,000 and £118,000. Kensington and Chelsea at £1.1 million is the most expensive borough in the capital for first time buyers, followed by Westminster at £906,882, the City of London at £711,009, Camden at £669,020 and Hammersmith and Fulham at £690,296. The highest prices for first time buyers outside of London are Surrey with an average of £323,973, Hertfordshire at £305,043, Berkshire at £292,227, Oxfordshire at 286,962 and Buckinghamshire at £286,511. These areas have seen first time buyer prices rise by between £80,000 and £96,000 since 2012. ‘First time buyers are paying almost as much as second and third steppers in actual price terms yet the percentage increase in first time buyer properties is tracking at even greater than regular house prices. It really does highlight the issue facing the nation's next generation of aspirational home owners,’ said Russel Quirk, chief executive officer of eMoov. ‘How the government expect anyone to get on in life when the first hurdle they face is all but unobtainable, to begin with, is beyond me, especially in London. Over 90% of the capital’s boroughs have seen the price paid by first time buyers increase by more than £100,000 in just four or so short years,’ he pointed out. ‘We must address this issue and find a way to bring home ownership back in reach of the average home buyer, not just in London, or the surrounding commuter counties, but to the whole of England,’ he added. Continue reading
