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Home prices rising steadily in most metro areas in the US, new data shows
A climb in home sales throughout the United States amidst insufficient supply caused home prices to steadily rise in most metro areas during the second quarter of 2015. The median existing single family home price increased in 93% of measured markets, with 163 out of 176 metropolitan statistical areas (MSAs) showing gains, according to the latest quarterly report from the National Association of Realtors. Just 13 areas or 7% recorded lower median prices from a year earlier and the number of rising markets in the second quarter increased compared to the first quarter, when price gains were recorded in 85% of metro areas. The data also shows that 34 metro areas or 19% experienced double digit increases but this was a decline from the 51 metro areas in the first quarter while 19 or 11% double digit increases in the second quarter of 2014. Lawrence Yun, NAR chief economist, said that the housing market has shifted into a higher gear in recent months. ‘Steady rent increases, the slow rise in mortgage rates and stronger local job markets fuelled demand throughout most of the country this spring,’ he explained. ‘While this led to a boost in sales paces not seen since before the downturn, overall supply failed to keep up and pushed prices higher in a majority of metro areas. With home prices and rents continuing to rise and wages showing only modest growth, declining affordability remains a hurdle for renters considering homeownership, especially in higher priced markets,’ he added. The national median existing single family home price in the second quarter was $229,400, up 8.2% from the second quarter of 2014 when it was $212,000. The median price during the first quarter of this year increased 7.1% from a year earlier. The five most expensive housing markets in the second quarter were the San Jose, California metro area, where the median existing single family price was $980,000, followed by San Francisco at $841,600, Anaheim-Santa Ana, California at $685,700, Honolulu at $698,600, and San Diego at $547,800. The five lowest cost metro areas in the second quarter were Cumberland where the median single family home price was $82,400, Youngstown-Warren-Boardman, Ohio, at $85,000, Rockford, Illinois, at $94,700, Decatur, Illinois at $96,000, and Elmira, New York at $98,300. Total existing home sales, including single family and condo, increased 6.6% to a seasonally adjusted annual rate of 5.3 million in the second quarter from 4.97 million in the first quarter, and are 8.5% higher than the 4.89 million pace during the second quarter of 2014. ‘The ongoing rise in home values in recent years has greatly benefited homeowners by increasing their household wealth,’ said Yun. ‘In the meantime, inequality is growing in America because the downward trend in the home ownership rate means these equity gains are going to fewer households,’ he added. At the end of the second quarter, there were 2.3 million existing homes available for sale, slightly above the 2.29 million homes for sale at the… Continue reading
Good design could help make Build to Rent popular in the UK, says a new report
Good design is the secret for the future success of the build to rent sector in the UK with developers needing to look beyond traditional layouts, says a new report. Britain is on the verge of a rental revolution with around £30 billion of institutional investment earmarked to build and manage homes for rent, but success means creating homes that foster a sense of community, according to the report. Indeed, the report ‘Funding Britain’s rental revolution’, by Addleshaw Goddard, a law firm and the British Property Federation, a trade body, says Build to Rent could bring in substantial additional finance for housing. For example, it says that getting tenants to know their neighbours will help encourage them to stay for the long term, saving operators money on costly voids. The key to this will be creating user friendly living areas that encourage circulation within the buildings. It points out that much of the concept around Build to Rent is borrowed from North America’s multifamily sector where listed companies own much of the housing stock. Many of the Build to Rent schemes coming forward will include a range of communal space throughout the buildings and the report suggests this could include top floor amenity decks in the place of penthouse flats allowing all renters to benefit from the views and additional space. Others will be simpler, such as a lobby area with shared seating but the report says that crucially, all schemes need to be of a decent quality. Overall it suggests that the shift towards a professionally run rental market with developments owned by single companies rather than multiple speculators and buy to let investors, promises to offer Britain’s nine million renters higher standards, better value and greater transparency with homes purposefully designed for renters. Institutions such as APG, Hermes, and Legal & General, together with companies such as Grainger, Essential Living and Fizzy Living are spearheading the new sector and the report says that the growth of Build to Rent is good for the economy, communities, investors and consumers. It also points out that extra finance for housing is unlikely to surface through existing house builders or council funded development so Build to Rent could bring in more than £30 billion over the next five years. The positive includes that fact that it allows investors to match to long term liabilities such as annuities or pensions with stable returns delivered from rent and it reduces the amount of debt held by individuals at a time where record low interest rates are set to rise. On top of this Build to Rent investors can take a long term view and residents will be offered long term tenancies since the homes will not be sold off. Also, landlords will encourage tenants to stay by offering onsite amenities and good customer service. In America, this is the way companies seek to beat their competition. Build to Rent has emerged as a separate new asset class, distinct from… Continue reading
Development land prices in England and Wales down 0.9% in second quarter of 2015
The average price of greenfield land in England and Wales fell by just under 1% between April and June, according to the latest sector index. The 0.9% fall was a more moderate decline than the 1.8% fall recorded in the first quarter and it takes the annual fall in prices to 2.4%, the residential development land index from Knight Frank shows. However, the market remains localised. Development land prices in prime central London, for example, are up by 0.9% in the second quarter of the year and up 12.1% on an annual basis. Prices have returned to levels last seen in Autumn 2013. The firm’s index report says that prices reflect the fact that house builders have had access to relatively higher levels of consented land in the last few years because of the National Planning Policy Framework which has allowed them to top up their supply of land. As a result, house builders and developers are more selective about the sites they are now choosing to buy. There is a shortage of supply of consented greenfield land in some areas of the Home Counties due to the planning system for example, and a resulting premium for the sites that do come on the market. The report says that in central London there is still good demand for development land, although buyers are applying more detailed criteria before making offers, with a bigger consideration being paid to build cost inflation. ‘The sales market has returned to more normal conditions, along with absorption rates, and this is being reflected in a slowing in the growth of development land prices,’ said Gráinne Gilmore head of UK residential research at Knight Frank. ‘While there are also signs that build cost inflation, which has risen sharply over the last 18 months, is now levelling off, developers are still having to factor these higher costs into their offers. In addition, house builders are generally maintaining their margins, and this is weighing on land prices,’ she explained. ‘However there is still strong competition in areas which are considered to have real opportunity for growth, these include areas in outer London, and particularly for sites where completed units can be delivered for less than £1,000 per square foot,’ she added. Continue reading
