Daily Market Update: Housing affordability slightly improved

by MPA20 Feb 2015

Housing affordability slightly improved

Affordability of housing has improved slightly according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index. With easing prices in some markets and lower mortgage rates 62.8% of new and existing homes sold in the last quarter of 2014 were affordable to those earning the U.S. median income of $63,900. In the previous quarter the figure was 61.8%. 

Investors, cash buyers fall in 2014

The level of property purchases by institutional investors and cash buyers fell in 2014 overall, but increased in the last quarter. A report from RealtyTrac shows that last year 105,278 single-family homes were sold to institutional investors, defined as entities that purchase at least 10 properties in a calendar year. 

That’s 4.2% of all sales and is down 31% from 2013 to a four-year low. In the fourth quarter of last year though there was an increase in institutional investor activity, from 3.5% of all single-family homes in Q3 to 3.7% in Q4. 

This is still well below the 5.4% for the same period in 2013. The top choices for these investors over the last four years have been Florida, California, Georgia, Arizona and North Dakota.  

Cash buyers were less prolific in 2014 than the previous year with 944,892 single family homes and condos purchased, down 13% from in 2013 and representing 30.9% of all sales during the year, a four-year low. Florida, California, Michigan, Georgia and Arizona have seen the most cash purchases in the last four years. 

Borrowing’s getting easier

It’s getting easier to qualify for a home loan according to the Mortgage Bankers Association’s credit availability report. 

A loosening of criteria and more choice of mortgages was good news for homebuyers in January and many lenders are already offering products with 3% down with Freddie Mac and Fannie Mae both having programs for low down payments. 

Brad Blackwell from Wells Fargo Home Mortgage told the Arizona Daily Star that the firm was already “opening up the credit box” and has relaxed some of its previously tighter restrictions. It could be good news for first-time homebuyers who had given up on being able to join the property ladder. 

Home sales and starts slip back in Phoenix

Home sales and new building in Phoenix slipped back in January after a boom in December. New stats from RL Brown Housing Reports show that home sales fell to 620 from 1006 in December while building permits fell to 799 from 977. 

The median price edged up to $306,000 in January from $305,000 a month earlier. The fall in sales is partly due to offers being made by builders in the run up to Christmas which were not available in the New Year.


Should CFPB have more supervision over credit agencies?