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First time buyers in the US face higher prices, latest index shows
Entry level home values in the United States for properties popular with first time buyers have increased by 8% in the last year, twice as fast as top tier home prices, new research shows. It means that first time byers are facing stiff competition and buyers looking for more expensive homes have more choice, according to the data from the latest real estate market report from property firm Zillow. The data also shows that the number of expensive homes for sale has dropped slightly, but there are far fewer entry level homes on the market with supply in this sector down by 9% year on year. Nationally, home values rose 5.4% over the past year, to a median home value of $186,100 while rents increased by 2.9% to a Zillow Rent Index of $1,407. Home values for the most expensive homes on the market, which at one point in February 2014 were growing at an average of 7% annually, have stabilised. Those homes have been gaining value at about 4% each year since the beginning of 2015. According to the index report the stark differences between the top and bottom of the housing market shed light on the two very different experiences home buyers will face in most markets this summer. Buyers looking for the most expensive homes will find slashed prices, more options and less competition. It's a much different story for first time buyers, who will be up against rising prices, low inventory and tough competition, with homes selling over asking price in many of the nation's hottest housing markets. Over the past 18 months, the percent of listings with a price cut among the most expensive third of homes has slightly increased, while the percent of listings with a price cut among entry level homes have decreased. Indeed, since the beginning of 2015, top tier homes have had the most price cuts which the report says is another sign that top tier buyers are having an easier time shopping for homes in the current market. The rental market is also stabilizing at the high end. A recent Zillow analysis found that rents aren't rising as quickly for apartments in more expensive zip codes. ‘The top of the market is starting to stabilise, and people are beginning to take notice. Buyers looking for entry level homes are having bidding wars in many markets, while it's not uncommon for high priced homes to stay on the market a few months longer,’ said Zillow chief economist Svenja Gudell. ‘The housing market is much more forgiving for current homeowners looking to move into a bigger, more expensive home. These buyers can be a bit more selective, and may even get a good deal,’ she added. Buyers looking for a home at the top of the market will have more to choose from than those looking for a home in the bottom third of the market, which are often sought after by first time home buyers. The… Continue reading
Thousands of home owners with interest only mortgages have no pay off plan
Up to one in 10 home owners aged 55 and over across the UK are still paying interest only mortgages with some unsure of how they will pay off their debt. Research shows that 10% of the 1.4 million owners in this age group still paying a mortgage have an interest only deal, amounting to 143,500 households, according to research from Homewise. It also found that while the majority are confident of clearing the debt some 17%, or 24,300, admit they will be unable to clear the debt. The average amount owed by over 55s with interest only mortgages is around £91,000 with one in seven owing more than £150,000. Homewise, which offers the Home for Life Plan enabling over-60s to buy homes at discounts of up to 59% under a lifetime lease, is urging those with interest only issues to start planning ahead. The Council of Mortgage Lenders estimates that at end of 2015 there are around 1.7 million pure interest only mortgages outstanding with another 500,000 part repayment and part interest only loans. That represents a major success by mortgage lenders and the Financial Conduct Authority which has campaigned since 2012 to help borrowers focus on repaying loans and the number of outstanding interest-only loans has been cut from 3.2 million in three years. Mark Neal, managing director at Homewise, said that the mortgage industry has made massive strides in tackling the interest only issue and has helped borrowers to take action and it is good news from the research that the majority have plans in place to ensure they can pay off the capital but there are still substantial numbers who do not appear to know what they will do. Homewise’s research also shows 34% of over 55s plan to clear their interest only mortgage with cash from savings and investments while 10% aim to use pension cash to clear the debt. Another 11% are banking on an inheritance. Continue reading
Commitment to build new homes to cope with demand reaffirmed after EU vote
UK Housing Minister Brandon Lewis and Communities Secretary Greg Clark have reaffirmed that new homes are still a top priority of the Government post Brexit. At a meeting with the Home Builders Federation (HBF), whose members build around 80% of new homes in England and Wales, they reiterated the Government’s ambition to build a million more homes. They pointed out that this ambition is underpinned by a record £20 billion housing package announced in the Spending Review and Government backed schemes, including Help to Buy and Shared Ownership, which have supported over 309,000 home owners since 2010. The HBF and its members stated that all indicators show reservations and sales rates have not been affected by last week’s referendum on leaving the European Union. Members restated their commitment to driving up supply and increasing the number of new home owners. Parties spoke of their confidence in the strength of the housing market with strong demand for housing. The Government and HBF agreed to continue to work jointly over the coming weeks to ensure shared ambitions are met. ‘The action we have taken over the last six years to get the country building again has put the industry in a position of strength. We have doubled investment in housing and set out the largest affordable house building program since the 1970s,’ said Clark. Peter Andrew, HBF deputy chairman pointed out that the need for new homes continues as does the Government’s commitment to getting them built and extending home ownership to anyone that aspires to own a home of their own. ‘We were very pleased to hear the Secretary of State reaffirm the Government’s commitment to increasing housing supply. We welcome his reiteration of support for successful programmes like the Help to Buy: Equity Loan scheme which is underpinning demand and helping tens of thousands of buyers each year to take their first steps on the housing ladder,’ he said. ‘House builders remain confident in the underlying level of demand for housing and will continue to deliver the homes the country needs,’ he added. Continue reading
