Tag Archives: united-states
More US housing markets were less affordable in first quarter of 2016
More housing markets in the United States were less affordable than their historically normal levels in the first quarter of 2016 than a year ago, new research shows. Some 9% of county real estate market were less affordable compared with 2% a year ago, according to the analysis of median home prices from publicly recorded sales deed data collected by RealtyTrac and average wage data from the US Bureau of Labour Statistics. The affordability index was based on the percentage of average wages needed to make monthly house payments on a median priced home with a 30 year fixed rate and a 3% down payment, including property taxes and insurance Out of the 456 counties analysed in the report, some 43 had an affordability index below 100 in the first quarter of 2016, meaning buying a home was less affordable than the historically normal level for that county going back to the first quarter of 2005. That was up from 10 counties in the first quarter of 2015. At the peak of the housing bubble in the second quarter of 2006 some 454 of the 456 counties analysed, more than 99%, were less affordable than their historic norms. In the first quarter of 2012, when median home prices bottomed out nationally, only two counties out of the 456 analysed, less than 0.5%, exceeded their historically normal affordability levels. ‘While the vast majority of housing markets are still affordable by their own historic standards, home prices are floating out of reach for average wage earners in a growing number of U.S. housing markets,’ said Daren Blomquist, senior vice president at RealtyTrac. ‘The recent drop in interest rates has helped to soften the blow of high flying price appreciation in some markets, but the affordability equation could change quickly if interest rates trend higher and home prices continue to rise faster than wages,’ he explained. The top 20 county housing markets least affordable in the first quarter of 2016 compared to their historic affordability norms included counties in Denver, New York City, Omaha, Nebraska, Austin, Dallas, San Francisco and St. Louis. The five most populated county housing markets less affordable than their historic norms were Kings County, New York Brooklyn, Dallas County, New York County, New York Manhattan, Alameda County, California in the San Francisco metro area, Oakland County, and Michigan in the Detroit metro area. The top 20 county housing markets most affordable in the first quarter of 2016 compared to their historic affordability norms included counties in Boston, Baltimore, Birmingham Alabama, Providence, Rhode Island and Chicago. The five most populated county housing markets still more affordable than their historic norms were Los Angeles County, Cook County, Chicago, Harris County Texas, Maricopa County Arizona and San Diego County. Nationwide in the first quarter of 2016, the average wage earner needed to spend 30.2% of monthly wages to make monthly mortgage payments including property taxes and insurance on a median priced home at $199,000, up… Continue reading
House prices in UK cities up 11% year on year, latest index shows
House prices in cities across the UK increased by 11% year on year in February, taking the average value to £234,900, according to the latest index. This was up from 8.1% a year ago and the highest rate of growth for almost 18 months, the Hometrack UK cities house price index shows. The report says that there has been a notable and unseasonal acceleration in house price growth in the last three months across most large regional cities thanks, in part, to a temporary increase in demand from those looking to beat the stamp duty increase for second homes from April onwards. It also explains that increased demand from existing home owners in cities where the economic recovery has been less pronounced is an important underlying theme given that the majority of housing sales 80%, continue be driven by home owners. Some 16 of the 20 cities covered by the index have registered an increase in the annual rate of house price growth increase in the last year. Some regional cities are recording their highest growth rates for over a decade as the recovery in house prices gains momentum. Four cities have seen the rate of growth slow with the greatest slowdown in Aberdeen and a loss of momentum in Belfast where a modest recovery appears to have stalled with house prices still 45% down on their 2007 levels. The data also shows that in Portsmouth and Leeds house prices are rising much faster than earnings at between 8% and 9% per annum and Portsmouth, Nottingham and Birmingham are recording the highest rates of annual house price growth for over 10 years while Leeds and Glasgow have the highest growth rates for over eight years. All these cities have seen a continued pick up in house price growth since 2013 on economic growth, an improving employment outlook, earnings growth and low mortgage rates, the report adds. However, there are no consistent patterns as to the types of property driving higher growth in these five cities. In Portsmouth detached homes are rising at twice the rate of the city which is the same trend, with a lesser degree of magnitude, in Nottingham. In Birmingham the highest growth rate is being recorded for flats at 11.3% against 7% for the city while in Leeds terraced houses with growth of 11% are recording the highest growth compared to the city at 7.8%. The four high growth cities of London, Bristol, Oxford and Cambridge continue to record double digit rates of house price inflation but there are signs that the rate of growth is starting to slow. All these cities recorded a small drop in the headline rate of growth over February as affordability and sentiment factors impact pricing levels A closer analysis of the 46 local authorities that cover the London City area shows the average growth rate in the last quarter is approaching half the rate recorded, on average, over the last 12 months. The report suggests that… Continue reading
UK buy to let landlords face tougher lending rules
Some buy to let landlords in the UK face tougher regulation when it comes to getting a mortgage for expanding their portfolio, the Bank of England has announced. In what may be seen as another blow to the buy to let market but the Bank’s Financial Policy Committee (FPC) says that some lenders are applying ‘weaker’ standards when it comes to applications in this sector. The FPC also believes that the rapid rise in buy to let lending, while likely to slow when the new stamp duty levy comes into play on 01 April, the sector is still not without potential threats in terms of financial stability. So there will be stricter affordability checks. Landlords with four or more properties will be expected to declare the rental income they expect to receive from tenants and also their own income and spending habits. This is to ensure they can still afford the mortgage if a tenant defaults on their rent or the property is left vacant. Landlords will also have to prove they can cope if interest rates rise sharply and can afford all the costs associated with renting out a property. This includes tax, which will rise on buy to let properties from next year. ‘The FPC remains alert to potential threats to financial stability from rapid growth in buy to let mortgage lending,’ the statement says, showing that the outstanding stock of buy to let mortgages has risen by 11.5% in the year to the fourth quarter of 2015. ‘The macro prudential risks centre on the possibility that buy to let investors could behave pro-cyclically, amplifying cycles in the housing market, as well as affecting the resilience of the banking system and its capacity to sustain lending to the wider real economy in a stress,’ the FPC explains. ‘The FPC welcomes and supports the Supervisory Statement issued by the Board of the Prudential Regulation Authority (PRA) to clarify its expectations for underwriting standards in this market, including guidelines for testing the affordability of interest payments,’ it points out. ‘The PRA's review of lenders' plans revealed that some lenders are applying standards that are somewhat weaker than those prevailing in the market as a whole. The PRA's action is a prudent supervisory measure intended to bring all lenders up to prevailing market standards. It will guard against any slipping of underwriting standards during a period in which rapid growth plans could be challenged by the impact of forthcoming tax changes,’ it adds. The FPC statement also points out that the growth of buy to let mortgage lending is likely to slow in the second quarter of this year as changes to stamp duty take effect and that forthcoming changes to mortgage interest tax relief and the implementation of the PRA Supervisory Statement will probably dampen growth further. ‘The FPC will continue to monitor closely these developments and potential threats to financial stability from the buy to let mortgage market,’ it adds. The… Continue reading
