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Renting costs twice as much as owning a home in US cities
People renting a home in the United States can expect to pay twice as much of their incomes on their rent than an owner on mortgage payments, new research has found. It means that it is more affordable to buy a home now in most US metros than it was 15 years ago, even for those putting down less money on a home, according to a Zillow analysis of third quarter income and home value data. Renters, however, continue to pay an increasing share of their income to their landlords as rents soar and incomes remain flat. On average, US home buyers making the nation's median income and purchasing the typical home spend 15.3% of their income on their monthly house payment, down from the historical norm of 22.1% during the pre-bubble period from 1985 to 1999. On the other hand on average, US renters spent 29.9% of their monthly income on rent in the third quarter of 2014, up from 24.9% historically. Younger buyers, earning less money in many areas and making smaller down payments on a home, should expect to spend slightly more of their income on mortgage payments at around 17.4%. The Zillow report says that homes for younger buyers remain affordable thanks to continued low mortgage interest rates and their tendency to shop for less expensive properties. However, the report warns that continuously rising rents across the country could drive more people into the home buying market, but they also make it more difficult for first time buyers to save for a down payment. A breakdown of the figures shows that Washington DC renters can expect to spend 27.1% of their income on rent, up from 16.2% historically while in Miami, rent as a percentage of income has risen from 26.5% before the bubble to 44.5% currently. ‘Despite rising home values, homeownership remains very accessible for buyers that can scrape together a down payment, even if that down payment is relatively modest, find a home to buy and secure financing,’ said Zillow chief economist Stan Humphries. ‘But what keeps me up at night is the fact that it still remains so difficult for so many potential buyers to make those particular stars align, largely because renting is so unaffordable these days,’ he explained. ‘It's very difficult to come up with a down payment when so much of your monthly pay cheque, especially on an entry level salary, is going to your landlord instead of into your savings. Buying conditions are getting better every day, and in time the allure of fixed housing payments and building wealth through home equity will draw more buyers out of rentals and into home ownership,’ he added. The report also points out that home ownership rates in the US have steadily declined, even as the housing market has recovered, in part because millennials have delayed their entry into the housing market. But it is likely that by the end of 2015, millennials aged 23 to 34, will overtake Generation X as the biggest… Continue reading
UK house prices predicted to rise by 6% in first quarter of 2015
UK house prices are predicted to rise by up to 6% in the first quarter of 2015 but then start slowing as the May general election approaches, according to one forecast. Prices could even start to drop by around 2% in the last half of the year and it could be a worse scenario if the current opposition Labour party wins, says the prediction report from low cost online estate agents Hatched. Hatched also predicts growth to continue at somewhere around 4% to 5% in 2015, whilst warning home owners to be prepared for a rocky spell around April, May and June, with the uncertainty that a general election inevitably brings. According to Adam Day, the firm’s managing director, a Labour victory in May could potentially have a hugely disruptive effect on the property market as the party is known for surprising voters with unexpected measures and excessive red tape. He pointed out that the last Labour win led to the introduction of Home Information Packs which then had to be scrapped. ‘The way they were introduced wasn't thought through. The government announced the specific date that HIPs were to become a legal requirement, which led to hundreds of thousands of home owners rushing to put their house on the market in an attempt to avoid the cost and bureaucracy associated with their production,’ he explained. ‘It was this slapdash strategy, which consequently led to an oversupply of properties that brought on the beginnings of the crash in 2008,’ he added. Interest rates are also expected to rise in 2015, although for many home owners it will not have a huge impact. But it is likely to affect first time buyers who tend to spend a higher percentage of their income on home costs. However, Hatched expects interest rate rises to be a contributor to the slowdown for the housing market in the final half of the year. Day also expects there to be a significant reduction in high street agents. ‘Many agents will have over staffed themselves this year because it has been so busy, so when the property market does begin to slow in the middle of the year, they will have over extended themselves,’ he suggested. He believes that 2015 will see online estate agencies continue to prosper and traditional agents who decide to join the online revolution and thus respond to customer demand by driving efficiencies with the aim of lowering their fees, should also enjoy success and stand out in a market which is likely to get tougher as the year progresses. Continue reading
Landlords facing serious court delays on evictions due to cuts
Under resourced county courts in England are exasperated by the number of possession claims being put forward, resulting in costly delays for landlords, it is claimed. According to tenant eviction service Landlord Action it has become such a problem in the last three months that chasing up cases with the courts is now a full time role for one member of their in-house legal team. The vast majority of residential possession claims are dealt with in the county courts and enforced by county court bailiffs. However, government spending cuts, an ever growing number of possession cases which have increased around 15% on last year, are leading to overload. On top of this the firm points out that some courts are insisting that bailiffs must no longer act alone, only in pairs, and this has added to serious delays in the eviction process. ‘We are forever chasing courts for updates on possession orders, Notice of Issues or bailiff appointments. By the courts' own admission, cases are getting overlooked, administrative errors are being made and there are simply not enough bailiffs to support the number of cases, leading to long delays,’ said Julie Herbert, head of legal at Landlord Action. This is having serious implications for landlords who are not only losing thousands of pounds in unpaid rent but racking up more legal costs the longer a case goes on. Some landlords, who are unable to meet mortgage payments as a result, even face possible repossession, in addition to the added risk of their property being left uninhabitable by current tenants, where communication has broken down. One landlord, Mr Waller, has had severe delays with his case as a result of the courts losing his claim, twice. Landlord Action finally obtained a hearing date, which took place on 24 November. ‘Our eviction case has been delayed for almost a year due to severe maladministration by the courts. Files were repeatedly lost and the inefficiency we and Landlord Action encountered was astounding,’ said Waller. ‘This has been a deeply frustrating experience for us as landlords, but an even more harrowing one for our tenant who desperately wants to be rehoused by the council and needs a court order. We're in an impossible catch 22 situation, which only the courts can resolve. The negligence and insouciance of certain individuals are quite literally destroying people's lives,’ he added. Herbert of Landlord Action said another common frustration is when a possession order has been granted and a bailiff appointment confirmed, but the tenant makes a last minute application because they have nowhere else to go. ‘The standard procedure is that a hearing has to be considered by a judge. We recently learnt that many of these applications don't even reach a judge, who would have the authority to strike out an application based on the information already provided,’ she explained. ‘Instead, the knee jerk reaction of court staff is to set down a hearing date, in which everyone is dragged to court,… Continue reading
