Houston – we have a problem
While there have been strong gains in some housing markets recently it’s not a universal picture. In Houston there are many homes left unfinished or unsold according to a report by research firm Metrostudy. It found that in July sales were down 11 per cent across the Houston area and closings were down 13 per cent from a year earlier. The number of homes that are completed but unsold increased 16 per cent. It also found that the cancellation rate for home contracts increased in July to 22.5 per cent from an average of around 19.5 per cent earlier in the year.
Scott Davis is Metrostudy told the Houston Chronicle that while these figures are bad news for builders, they represent opportunity for buyers: "If you're looking to buy a home and you've had sticker shock, the second half of 2015 is going to be a great time to go look.” He concluded that although there has been a slowdown the glut of unsold homes is not yet at crisis level and things could well pick up in the second half of the year.
Mortgage credit more available in August
Getting a mortgage became easier in August according to the Mortgage Credit Availability Index from the Mortgage Bankers’ Association. Lending restrictions eased slightly with the MCAI increased 0.5 per cent to 126.1. "Mortgage credit availability increased in August and has increased in eight of the last nine months," said Mike Fratantoni, MBA's Chief Economist. "While much of the loosening has been for jumbo loan products, the availability of conforming conventional mortgage credit has also somewhat increased, including for mortgages with higher loan-to-value ratios and borrowers with lower credit scores. Fannie Mae recently announced changes to their affordability suite of products, but these changes have not yet impacted the MCAI."
More homes out of negative equity in second quarter
Homes in the lower price range led the rise in the level of properties coming out of negative equity in the second quarter of 2015. Zillow reports that the overall US negative equity rate dropped to 14.4 per cent, falling below 15 per cent for the first time since the real estate bubble burst. Value growth was strongest for the lowest value homes, which were most likely to be underwater. However condo owners are more likely to be in negative equity that other housing type owners; almost 20 per cent of condos with a mortgage are underwater. This is particularly prevalent in Chicago, Orlando and Las Vegas.