Tag Archives: housing
Negative equity in US housing market falls considerably
Most major housing markets in the US have seen the number of home owners in negative fall by half since the peak of the economic crisis, new figures show. More than seven million home owners have escaped negative equity since its peak in early 2012, both because of foreclosures and improving home values, says the data from real estate firm Zillow. Overall US negative equity fell to 16.9% in the third quarter, down significantly from its peak of 31.4% in the first quarter of 2012. Zillow expects the negative equity rate will continue to fall to 15.2% by the end of the third quarter of 2015. Roughly 8.7 million home owners remain trapped underwater on their mortgages, but the negative equity rate has halved since 2012 in the markets hit hardest by the recession including Miami, Atlanta, Detroit, Riverside in California and Las Vegas. The firm points out that declining negative equity will have a ripple effect in the housing market, allowing previously stuck homeowners to list their homes for sale and adding to overall for sale inventory just as millennial buyers are expected to begin to enter the market en masse in coming months and years. This new inventory will also help slow home value appreciation, which has been fuelled by high demand for homes and low supply. ‘The market has made terrific strides since bottoming out in late 2011 and early 2012, with millions of underwater home owners freed in just the past few years, and millions more set to surface in coming months and years,’ said Zillow chief economist Stan Humphries. ‘Looking at negative equity helps us understand so many of the currently out of whack dynamics in the housing market, including low inventory, rapid home value appreciation and weak sales volumes,’ he explained. ‘None of these problems will be solved overnight, in large part because negative equity will likely be a part of the housing market for years, and easily into the next decade in some hard-hit areas. But we're moving in the right direction, and time will heal all wounds,’ he added. The research also shows that owners of less expensive homes were more likely to be underwater in the third quarter than owners of more expensive homes, in some cases, much more likely. In Detroit, for example, 49.2% of homes valued in the bottom price tier were underwater, while just 7.6% of the area's highest priced homes were upside down. Similarly, in Chicago, 41.4% of bottom tier homes were in negative equity, compared to 23.9% of middle tier homes and 10.4% of top tier homes. Nationwide, 27.4% of bottom tier homes were in negative equity in the third quarter, compared to 15.7% of middle tier homes and 9.3% of top tier homes. Continue reading
UK surveyors report a resurgence in remortgage activity
November saw a resurgence in remortgaging activity even as the rest of UK housing market cooled, according to the latest research from Connells Survey and Valuation. Remortgaging was the most robust sector of the housing market and performed well both on a monthly and annual basis. The total number of remortgaging valuations conducted in November increased by 10% compared to October, and by 3% compared to November last year. ‘Remortgaging is defying the rest of the market. With the base rate set to remain low well into 2015, it is clear that this is driving demand,’ said John Bagshaw, corporate services director of Connells Survey & Valuation. ‘Lenders continue to offer even more competitive mortgage rates, while many households are using this opportunity to remortgage and reduce their monthly payments,’ he added. By contrast, the total number of valuations for all purposes fell 5% on an annual basis. This is a considerable improvement from a steeper drop of 10% over the 12 months to October 2014. On a monthly basis property valuations remained static since October. According to the firm November saw a marked shift in sentiment with more lenders and borrowers opting for a tone of caution. ‘Regulatory changes continue to impact other sectors of the market, especially first time buyers with restrictions on lending. On the other hand, the low base rate has powered demand for remortgaging, and to a lesser extent, buy to let,’ explained Bagshaw. ‘While this year the total number of valuations fell by 5% compared to last year, this annual figure compares favourably with historic data and exceeds the number of valuations recorded in November 2012, 2011 and 2010. With so many variables in play it remains to be seen whether this points to a cooling market in 2015 or if this is part of the usual festive seasonal trend,’ he pointed out. Buy to let also performed well compared with the rest of the market. On a monthly basis, the number of buy to let valuations dipped 5% since October and by 1% compared to the previous November. The sector is supported by an array of low LTV products and lenders have become more focused on low risk borrowers, such as landlords who typically have lower LTVs and multiple streams of income, according to the firm. As a proportion, first time buyer valuations now make up under a third of total activity at 28%. In terms of numbers this area of the market was down the most on an annual basis with a fall of 11% and also dipped 7% compared to the previous month. The number of valuations for owner occupiers moving home saw the second fastest annual fall, down 9% compared to November last year. However, on a month on month basis this sector of the market saw no change. ‘Recent policy changes such as loan… Continue reading
UK buy to let sector confident going into 2015, new research suggests
Confidence in the buy to let market will encourage significant investment in the sector by UK property investors in 2015, according to new research. This is despite the fact that 52% of buy to let property investors believe interest rates will rise next year, the report from specialist buy to let business Platinum Property Partners also shows. While the majority expect an increase, overall 42% believe interest rates will rise by less than 2% and only 10% expect to see interest rates rise by 2% or more. However, 29% cited a rise in interest rates as their biggest concern for 2015. An interest rate rise of any size would make buy to let borrowing more expensive, this hasn’t slowed down landlords’ ambitions as 43% of existing landlords intend to grow their portfolio of rental properties next year. Some 23% intend to expand their portfolio by one and 14% say they will purchase two more rental properties in the next 12 months. Landlords owning Houses in Multiple Occupation (HMOs) for young professionals and key workers have some of the biggest ambitions for 2015 with 52% planning to add to their portfolio during 2015, 29% planning to add two properties and 14% will add three. The survey also found that landlords still feel confident about capital growth despite recent reports that the housing market is slowing. While the Council of Mortgage Lenders (CML) point to a dip in mortgage lending as evidence that there has been a ‘plateau’ in housing market activity, landlords are confident that house price growth will continue during the course of the next five years. Just under half, 49%, expect UK property values to climb by up to 10% over this period, while a further 28% of investors predict an increase of 10% or more. HMO landlords have an even more positive outlook for capital growth with 43% saying property prices will increase by 10% or more, some 15% more than the overall average. None of the HMO landlords surveyed expect house prices to decrease in the next five years. However, UK buy to let investors have some concerns about what 2015 may bring. When asked for their number one concern, an increase in interest rates topped the poll at 29%, closely followed by future changes in laws and legislations for landlords at 26%. A further 9% are most concerned about the impact of a change of government ahead of the general election and 20% have absolutely no current concerns. ‘A rise in interest rates is one of landlords’ main concerns for 2015, yet the majority don’t anticipate that these rises will be dramatic or unaffordable. As a result, our research reveals that the sector will continue to grow next year, with two in five planning to add to their portfolio despite a likely interest rate rise,’ said Steve Bolton, PPP chairman. ‘Investors in HMOs show the greatest intention to increase their portfolios, which reflects the fact that HMOs… Continue reading
