Are builders only interested in the needs of the affluent?
With sluggish growth in sales of average homes, especially in multifamily units, builders are turning their attention to high-value projects according to a report in the New York Times
The report found that wealthier buyers are seen as a more reliable bet as they typically make larger down payments and are generally more financially sound. Although the $1 million and above sector is a small percentage of the market as a whole it has been growing.
Data from MetroStudy showed that one builder, Toll Brothers, sold 585 homes above $1 million last year, almost three times as many than in 2012. Developers said that one of the reasons for a focus on building more expensive homes is that as the recession eased they were only purchasing the most desirable plots of land.
Stan Humphries of Zillow said that the market needs homes of all price levels and for full recovery there needs to be greater supply of affordable homes. Read the full story.
Reuters poll: U.S. housing market to gain steam
The U.S. housing market is predicted to gain momentum this year according to a poll by Reuters
. The outlook is for strength in the labor market to boost housing activity and the survey shows optimism that there will be a 4% rise in the S&P Case-Shiller house price index over the next two years.
David Nice, an economist at Mesirow Financial in Chicago told Reuters:
"We expect the housing market to improve this year. It is only a matter of time until the improved jobs market has a positive effect on the housing market. We are betting that first-time buyers return this year.” Other economists polled agreed that the jobs market is the key to growth in housing activity and prices.
Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania, said that increased equity in homes would mean some who were unable to sell will be able to and that will help boost supply. Read the full story.
Prices set to rise says Kroll Ratings
Single-family home prices have started to rise following last summer’s weak market according to a report from Kroll Bond Rating Agency. However the analysis concludes that while low interest rates are helping price increases it not boosting mortgage lending:
“KBRA notes that the connection between interest rates, new mortgage originations and prepayments seems to have broken down.” The report says that while jumbo loans and home equity
loans increased last year, mortgage lending overall was at best flat.
The firm also criticized measures taken by the Consumer Finance Protection Bureau as having “a negative impact on mortgage lending and home ownership.” Read the full report.