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US homes values growing faster than expected, latest data shows
Home values in the United States are appreciating faster than experts expected, rising almost 5% over the past year, according to the latest index report. The April real estate market report from Zillow also shows that there are 3.4% fewer homes for sale than there were 12 months ago and home values are currently appreciating at 4.9%, almost 3% faster than Zillow predicted a year ago. The real estate report suggest that a smaller number of homes on the market will make it harder for first time buyers. The number of entry level homes for sale is down almost 8% over the past 12 months. Stiff competition and high demand, in addition to low inventory, stronger wage growth and low mortgage rates, are driving up home prices across the country, especially for entry level homes, which is forcing many aspiring home owners into bidding wars. Markets with the tightest inventory have some of the fastest rising home values. Over the past two years Portland has seen an almost 405 decrease in the number of homes for sale, with home values up 15% over the past 12 months. Similar patterns hold true in hot markets like Dallas, Seattle, and Denver, where inventory is down more than 20% and home value growth is in the double digits. In addition to low inventory, home values are rising in response to a strong job market, higher than expected wage growth and persistently low mortgage rates, the report also points out. Those looking to purchase a home will find more homes to choose from in the condo and luxury markets. Inventory is improving in these two markets due to high end construction, with the number of homes for sale close to hitting positive growth. Buyers searching for a single family home, or in the bottom or middle of the market, will have less to choose from. ‘New construction has been sluggish over the past year. We're building about half as many homes as we should be in a normal market. There still aren't enough homes on the market to keep up with the high demand from every type of home buyer,’ said Zillow chief economist Svenja Gudell. ‘In many markets, those looking to buy a home in the bottom or middle of the market will need to be prepared for bidding wars and homes selling for over the asking price. This summer's selling season's borders will most likely be blurred again as many buyers are left without homes and will need to keep searching,’ she explained. Homes in the top third of the housing market have more frequent price cuts than homes in the bottom and middle of the market and some 16% of top tier homes had a price cut over the past year compared to 11% of bottom tier homes and 13% of middle tier properties. Almost 125 of condos had a price cut over the past year, driven by more availability in the luxury condo… Continue reading
Remortgaging in UK hits seven year high of £6.4 billion in April
The value of remortgage lending in the UK has increased 48% year on year and is the largest amount recorded since November 2008, the latest data shows. The figures from LMS also show that the number of borrowers remortgaging exceeded 39,300 and is the highest since July 2009 while affordably improved markedly with typical remortgage repayments falling to a record low. This represents a 36% increase from the £4.7 billion n recorded in March and a 48% uplift from April 2015’s figure of £4.3 billion. The number of remortgage loans also increased by 41% from 28,000 in March to 39,353 in April. This is 47% more than April 2015 when 26,700 borrowers remortgaged. This is the greatest number since July 2009 when 39,500 remortgaged. Low interest rate has resulted in mortgage affordability improving sharply. Now remortgage payments as a percentage of income are at 16.79%, a record low, down from 18.4% the previous month. Andy Knee, chief executive of LMS, pointed out that March saw the market overwhelmed by second home owners and buy to let investors looking to push through transactions before changes to stamp duty came in, but as April arrived, existing home owners were able to remortgage and capitalise on the great rates currently available. ‘The average amount people are withdrawing through remortgaging fell to a 13 month low, suggesting household budgets are not as constrained as previously. Home owners can also celebrate that as a result of such low mortgage rates and rising incomes repayments as a percentage of income have fallen to a record low, boosting family finances,’ he said. But he also pointed out that the forthcoming referendum on the UK’s place in the European Union will continue to dominate headlines until the vote on 23 June which could have an impact on the mortgage rates that banks offer as well as household finances if the result is to leave. The data also shows that mortgage interest rates fell to 2.49% in March, down from 2.51% in February and the sum of annual remortgage repayments fell from £8,593 in February to £8,344 in March as a result of lower interest rates, while average household income rose by 7% from £46,605 to £50,000 in the same period. This meant that annual remortgage repayments as a percentage of income fell from 18.4% to 16.7% month on month, a record low. Average mortgage payments as a percentage of income also fell, from 21.2% to 19.7% between February and March, but this remains 3% more than remortgage costs. Continue reading
Home lending in Wales up year on year but down on quarterly basis
Lending to home owners in Wales increased by 25% year on year in the first quarter of 2016, according to the latest data from the Council of Mortgage Lenders (CML). On an unadjusted basis home owners borrowed £850 million, but while this was up 29% year on year it was down 16% quarter on quarter. They took out 6,600 loans, down 16% on the previous quarter but up 25% compared to the first quarter of 2015. First time buyers borrowed £330 million, down 20% on the fourth quarter 2015 but up 22% on the same period last year. This totalled 3,000 loans, down 19% quarter on quarter but up 20% year on year. The average age of a first time buyer is now 29 years old. Home movers borrowed £530 million, down 12% on the fourth quarter 2015 but up 36% compared to a year ago. This totalled 3,600 loans, down 14% quarter on quarter but up 29% year on year. Remortgage activity totalled £420 million, down 2% quarter four but up 20% compared to a year ago. This came to 3,700 loans, down 3% quarter on quarter but up 12% year on year. ‘The first quarter of the year typically sees a seasonal lending dip, but the year on year growth in activity in all lending types is encouraging,’ said Julie Ann Haines, CML Cymru chair. ‘It was the best first quarter performance for all lending types in Wales since 2007 and suggests a growth period for the market. With affordability improving this quarter, supported by a generally favourable economic backdrop, we would expect further growth in lending as we go into the summer months,’ she added. The CML report points out that while seasonal factors generally cause activity to be lower this period, this is the highest number of loans and the most borrowed for house purchase in the first quarter of the year since 2007. This was also the case for first time buyer, home mover and remortgage activity. Affordability metrics for first time buyers improved in the first quarter of 2016 compared to the fourth quarter of 2015. The amount borrowed went from £106,000 to £104,625 and the average household income of a first-time buyers went from 32,615 to 33,092 meaning income multiple in Wales from 3.30 to 3.22. The amount home movers borrowed went from £128,795 to £130,000 and the average household income of a home movers went from 46,818 to 47,500 meaning income multiple in Wales from 2.83 to 2.85. The amount first time buyers are spending of their monthly gross income to service capital and interest repayments was 17.2%, which was the lowest level since the CML began tracking this metric in 2005. Home movers are also paying close to record low proportions of income at 16.9%, unchanged from the fourth quarter 2015 and just off the lowest since we began tracking this metric in 2005 of 16.8% in the third quarter of 2013. Continue reading
