Investment
Negative equity rate falls to 13.1% in the US in fourth quarter of 2015
Fewer home owners in the United States were underwater as the negative equity rate fell to 13.1% in the fourth quarter of 2015, according to the latest data to be published. But more than 820,000 underwater home owners still owe over twice as much on their mortgages as their homes are worth, a reminder that some owners may not see positive equity in their homes in the foreseeable future. The data from the Zillow Negative Equity Report also shows that six million home owners were still in negative equity, which means they owe the bank more than their homes are worth. A year ago eight million home owners were upside down on their mortgages. The report explains that over time, negative equity can act as an anchor on a housing market, preventing underwater homeowners from listing their homes and re-entering the market. It is more prevalent in less expensive areas that are affordable to first time buyers. Without these homes available, many potential buyers are side lined and unable to take advantage of mortgage rates that remain near historic lows. It also points out that in the past year, millions of underwater home owners resurfaced as the total amount of negative equity declined by $75 billion, but some owners are so far underwater that positive equity may be several years away, leaving them stuck in their homes unable to sell. ‘Even though the number of underwater homeowners has fallen significantly since the peak of the housing crisis, negative equity persists in many markets as it fell at its slowest pace in a year,’ said Zillow chief economist Svenja Gudell. ‘Things are moving in the right direction, but some owners are still deeply underwater. As we move into the home shopping season, inventory is already low, and negative equity is keeping potential additional stock from becoming available,’ she added. Las Vegas still had the highest rate of negative equity at 20.9% followed closely by Chicago, where 20.5% of home owners were upside down on their mortgages. At the other end of the spectrum, in San Jose only 2.8% of mortgaged home owners were underwater. Continue reading
Latest data reveals success of UK govt’s flagship Help to Buy schemes
Over 150,000 people have achieved their aspiration of home ownership In the UK since the government’s flagship Help to Buy housing schemes were launched two years ago, the latest data shows. Some 80% were first time buyers, the average house price was £188,380 significantly below the national average, over half were for new build homes and 95% of Help to Buy completions took place outside of London. The figures confirm that it is first time buyers, for whom the scheme was designed, have indeed benefitted the most with 118,000 households having bought their first home via the scheme. First time buyers will have a further boost from the Help to Buy: Isa launched in December 2015. The scheme has already helped a quarter of a million first time buyers save for their first home by providing a bonus of up to £3,000. With almost all completions outside London, the highest number of homes through the mortgage guarantee scheme have been in the North West region and the equity loan scheme for new build properties is particularly prevalent in the South East region. First time buyers and second steppers will also have a further boost from the London Help to Buy scheme launched in February 2016. The scheme supports purchases of new build homes in the capital by offering a 5% deposit backed by an equity loan of up to 40% from the government. Figures for the mortgage guarantee scheme also show completions have been least concentrated in regions where house price growth is highest. In London the scheme makes up just 1% of all mortgage lending compared to an average of 3% across the country. Over half of the homes bought through Help to Buy are new-build properties, helping to contribute to the 14% rise in private house building since the launch of Help to Buy. This has supported new housing construction output with total new housing construction activity in 2015 the highest on record. Annual housing starts are now at an eight year high with over 700,000 new homes built since 2010. ‘The government is committed to helping people achieve the aspiration of buying their own home, and all our Help to Buy schemes have now helped almost half a million people,’ said Chancellor of the Exchequer George Osborne. However, he pointed out that while the stronger financial system means the Government expects banks to start to exit the Help to Buy Mortgage Guarantee scheme, the other Help to Buy schemes go from strength to strength. ‘Increased confidence coupled with our clear ambition to deliver one million new homes is leading to more house building with the numbers of new homes at a seven year high. Government backed schemes are helping an increasing number of people to realise that home ownership is realistic for them,’ said Communities Secretary Greg Clark. Housing Minister Brandon Lewis acknowledged that there is more work to be done to get the homes built people want but described the figures as… Continue reading
A beach view is voted top in UK poll
It is always said that location is important in the UK housing market and it seems that views are too and the most desirable is a beach, new research is found. But while 71% who took part in a new poll named a beach as the best possible view from their home, not all is lost for urban areas as 24% want to see bustling city life. Beach views came out top in the poll by curtains and blinds firm Hillarys, followed by coastal landscapes with 65% of the votes and small, picturesque village life with 54%. But one in 10 identified industrial city life as among their favourite views. Initially, respondents were asked to identify the views they would most like to have from their house and provided with a list of suggestions. In fourth place was farmland with animals, polling 46% if the vote, idyllic rural countryside with 39%, suburban community life with 36%, bustling city life 24%, landscaped gardens 23%, historic or heritage sites 22% and woodland 21%. In addition some 15% stated that they would like to have a view of ‘other houses’ from their home, while 9% felt that a view of ‘industrial city life’ would be ideal. When asked if they currently had their ideal views at home, just 19% stated that they did. The average respondent stated that they would pay an extra 20% for a house if it had access to their ideal view. ‘We have some incredible landscapes here in the UK. There is so much breath taking scenery, it’s easy to take it for granted and forget how lucky we are. The lush green countryside and quaint villages might be traditional, but it seems we have our hearts set on sandy white beachfront houses,’ said the firm’s spokesperson Helen Turnbull. ‘Although we may not be able to uproot our lives and relocate in to the scenery that our hearts desire, perhaps a jaunt to a well situated holiday home to soak up the atmosphere could be worth considering or try creating a nautical environment at home to give us that seaside feeling,’ she added. Continue reading
