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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
US housing negative equity rates falling, latest data shows
The housing market negative equity rate in the United States is falling but more than half of underwater home owners are nowhere near resurfacing, the latest research shows. More than 4 million US home owners owed the bank at least 20% more than their properties were worth in the first quarter of 2015, according to the report from real estate firm Zillow. That means those homes would have to appreciate at least 20% for their owners to have any chance of breaking even on a sale. While home values are forecast to continue rising, they are expected to do so at a slower pace than recent years. Overall the national negative equity rate dropped to 15.4% in the first quarter, down from 18.8% in the first quarter of 2015. The data also shows that the rate of negative equity improved in all of the 35 largest housing markets in the first quarter of 2015, a sign that, metro by metro and home by home, the country is continuing to recover from the lax lending rules and subsequent housing market bust of the last decade. At the peak of the real estate crisis, more than 15 million home owners owed more on their mortgages than their homes were worth, putting them in negative equity. Foreclosures, short sales and rapidly rising home values freed nearly half of those home owners, leaving 7.9 million home owners upside down at the end of the first quarter of 2015. Home owners who remain underwater will likely be the toughest to free from negative equity, the report points out. It also explains that while spring and summer are the busiest buying and selling seasons and this year there is high demand for homes in the bottom third of the market, a disproportionate number of those home owners are simply stuck in their homes and can't afford to sell to buyers looking for homes in their price range. The rate of underwater home owners was much higher among the homes with the least value. More than 25% of those who own the least valuable third of homes were upside down, compared to about 8% of the most valuable third of homes. The imbalance was even more pronounced in some markets. In Atlanta, for example, 46% of low end home owners were underwater, compared with 10% of high end home owners. And in Baltimore 32% of low end home owners were in negative equity compared to 9% of those who own the highest value homes. ‘It's great news that the level of negative equity is falling, but what really worries me is the depth of negative equity. Millions of Americans are so far underwater, it's likely they may not re-gain equity for up to a decade or more at these rates,’ said Zillow chief economist Stan Humphries. ‘And because negative equity is concentrated so heavily at the lower end, it throws a real wrench in the traditional housing market conveyor belt. Potential… Continue reading
