Tag Archives: Housing Affordability

Investors remain a crucial factor in the U.S. housing market. As mortgage rates rise along with home prices, it decreases affordability and edges owner-occupier buyers out of the market.

The National Association of Realtors' (NAR) Pending Home Sales Index (PHSI) for September indicates home sales will stumble in the year's final quarter as buyers struggle with declining home affordability. "This tells us to expect lower home sales for the fourth quarter, with a flat trend going into 2014. Even so, ongoing inventory shortages will continue to lift home prices, though at a slower single-digit growth rate next year," said NAR chief economist Lawrence Yun.

Country Financial, a financial services company based in Bloomington, Illinois, found in a recent survey that 48 percent of Americans say the market could reach a bubble over the next two years.

According to recently published data from the Census Bureau's American Community Survey (ACS), the homeownership rate was down in 2012 for the fifth consecutive year, falling to 63.9 percent. "By most measures, 2012 was a year of housing market recovery, with gains in housing construction, home sales, home prices, and mortgage originations. However ... the homeownership rate did not follow suit," said Patrick Simmons, director of strategic planning for Fannie Mae's Economic and Strategic Research Group.

National home prices will rise 4.8 percent over the next year, according to a third-quarter forecast from Veros Real Estate Solutions, a risk management, valuation services, and analytics firm based in Santa Ana, California. Regionally, Veros predicts continued strengthening in the West and a lag in the Northeast and parts of the South. The top 10 markets labeled by Veros' forecast are all located in Western states: Arizona, California, Nevada, Oregon, and Washington.

HomeVestors of America and Local Market Monitor together released a ranking of the most promising investment markets for the third quarter of 2013.

According to Homes.com's latest report, 22 of the top 100 markets in the United States reported price increases of more than 100 percent from their respective troughs, up from 19 the month prior. Marketing analyst Nicole Selvaggi explained that most of the markets that have come back completely "never suffered the significant numbers of foreclosures and short sales that characterized the housing economy from 2007 to 2012," and seven of the top 20 have benefited greatly from energy development from oil, gas, shale, or coal.

Despite rising interest rates, owning a home is still significantly cheaper than renting, according to Trulia's Summer 2013 Rent vs. Buy Report.

New research from finance information website MoneyRates.com suggests borrowers may not be benefitting from low mortgage interest rates as much as other analysts say. The first figures from the site's new Consumers Lost Interest Percentage (CLIP) Index show the difference between what consumers earn on one-month certificate of deposit (CD) rates and what they spend on 30-year mortgage rates is now 4.4 percent, nearly 55 percent higher than the 40-year average of 2.83 percent.

Market indicators continue to point to an imminent slowdown in home price gains--further allaying fears of another housing bubble in the making, Capital Economic says.