Cheaper to buy than rent in majority of markets
New analysis of official data across America shows that renters are paying more than homeowners in the majority of markets. RealtyTrac’s 2016 Rental Affordability Index shows that buying is more affordable in 58 per cent of markets, despite home price appreciation outpacing rent increases in 55 per cent of those areas. Rent increases are outpacing wage increases in 57 per cent.
“Renters in 2016 will be caught between a bit of a rock and a hard place, with rents becoming less affordable as they rise faster than wages, but home prices rising even faster than rents,” said Daren Blomquist, vice president at RealtyTrac. “In markets where home prices are still relatively affordable, 2016 may be a good time for some renters to take the plunge into homeownership before rising prices and possibly rising interest rates make it increasingly tougher to afford to buy a home.”
Of the 504 counties analyzed renting was more affordable in 213 including counties in Los Angeles, San Diego, New York City (Brooklyn) and Dallas. The counties leading affordability of home ownership over renting were in Chicago, Phoenix, Miami, California’s Inland Empire, Las Vegas and Detroit.
California realtors optimistic for 2016
Realtors in the Golden State are looking forward to 2016 with optimism according to the latest Pulse Report from the California Association of Realtors. Eight-nine percent are expecting similar or better market conditions in the next 12 months although there are some challenges expected. The greatest obstacle for the state is a shortage of homes for sale (28 per cent said that) followed by declining housing affordability (22 per cent) and overinflated prices (12 per cent). The survey found that listing appointments were down in November but seasonal factors helped stabilize floor calls and open house traffic. More than one in four homes (27 per cent) closed above asking price in November, and 40 per cent closed below asking price. One-third (33 per cent) closed at asking price. With home prices leveling off in recent months, more sellers are adjusting their listing price to become more in line with buyers’ expectations. About one-third (30 per cent) of properties had price reductions in November, down from 32 per cent in October.
Freddie says house prices to moderate, mortgage originations lower
The latest outlook from Freddie Mac shows some positive news for the housing market. Housing activity will grow in 2016 despite monetary tightening with total housing starts to increase 16 per cent year-over-year and total home sales to increase 3 percent. The corporation forecasts a slight moderation of home price increases to 4.4 per cent. With interest rates increasing it expects overall mortgage origination to be lower in 2016 than 2015 while rates are expected to average below 4.5 per cent.