Housing affordability improved in three-quarters (75%) of local authorities across England and Wales in 2023, compared with the previous year, according to the Office for National Statistics (ONS).

Affordability worsened in just under a quarter (24%) of local authorities and remained the same in 1%, the ONS said.

Average house prices increased in just over two-thirds (69%) of areas compared with 2022 – but average earnings increased in a bigger proportion of areas, at 88%.

Kensington and Chelsea in London was the least affordable area last year, with an average house price-to-earnings ratio of 34.3.

The most affordable was Burnley in Lancashire, with an average house price-to-earnings ratio of 3.7.

In 2023, 7% of areas typically had homes selling for less than five times the average earnings of workers. This was an improvement compared with 2022; however, in 1997, 88% of areas had this ratio.

The report said: “Therefore, affordability remains considerably worse than at the start of the series.”

Looking at England, in the 12 months to September 2023, the average home sold for £290,000, while average full-time earnings were £35,100.

This means that, in England, full-time employees could expect to spend 8.3 times their earnings on purchasing a home in their local authority area.

This represents an overall improvement in affordability compared with 2022, when the average home in England cost around 8.5 times the average wage.

In Wales, the average home sold for £196,500 in the 12 months to September, while the average workplace-based full-time wage was £32,400.

This gave an affordability ratio of 6.1, down from 6.4 in 2022.

House sales prices have become more affordable since 2021, but remain in line with pre-coronavirus pandemic trends, the ONS said.

The affordability ratio doubled in England from the start of the records in 1997 to 2007.

In 1997, a home in England was worth around three-and-a-half times the average wage, but by 2007 buyers faced paying just over seven times their salary typically to buy a home.

In Wales, affordability ratios doubled from 1997 to 2005 and peaked at 6.6 in 2007. Since then, they have remained between 5.5 and 6.5, with a less pronounced increase and decrease in the past three years than in England, the ONS said.

Mortgage rates have jumped amid increases in the Bank of England base rate, meaning that some existing homeowners could have a payment shock when their deal expires.

Recent signs that inflation is cooling have raised expectations around the potential for the Bank of England to start cutting the base rate in the months ahead.

Source: LBC

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As home price appreciation settles into a new post-pandemic pattern, once-hot housing markets in California and the West are cooling, while the East Coast continues to heat up.

Valuations zigzag by region. While the super-high-priced Bay Area and New York City markets might come to mind when you think “overvaluation,” a new report from credit rating agency Fitch Ratings reveals a surprising pick for the most overvalued housing market in the nation. Buffalo — a metro area where home values are just a fraction of prices in California — is the nation’s least sustainable housing market as of the fourth quarter of 2022, it says.

“Fitch believes overvaluation is moving to the East Coast from the West Coast, as the most overvalued states and metropolitan statistical areas significantly shifted in the past year,” the agency said in a statement.

Fitch’s 5 most overvalued housing markets

Fitch Ratings’ valuation measures look at such factors as home price trends, local incomes, employment, and household formation. According to its calculations, these are the five most overvalued metro areas, among the 100 largest metros in the U.S.:

1. Buffalo, NY: Housing in this Rust Belt metro area, which spans from Lake Erie to Lake Ontario, is overvalued by 27.1 percent, Fitch reckons. One unfavorable trend: population decline. New York was the nation’s fastest-shrinking state last year and has lost more than 520,000 residents since April 2020, per the Census Bureau. But Buffalo’s home values are strong — they rose 15 percent from the third quarter of 2021 to the third quarter of 2022, according to the Federal Housing Finance Agency (FHFA).
2. Fayetteville, AR: Homes here are overvalued by 27 percent, Fitch estimates. This metro area experienced 23 percent price appreciation in the past year, FHFA reports. The median sale price is just under $400,000, according to Realtor.com, putting the market on par with national norms.
3. Rochester, NY: Fitch estimates that the housing market in this metro area is overvalued by 26 percent. Rochester is only about 75 miles from Buffalo, and the market dynamics are similar — except Rochester’s home prices are lower, and its incomes a bit higher.
4. Ogden, UT: This metro area, which experienced a population surge from people fleeing pricier housing markets, has cooled a bit. Home values declined by 0.6 percent from the second quarter to the third quarter, FHFA says. But homes remain overvalued by 25.5 percent, according to Fitch.
5. Winston-Salem, NC: Area home values here soared 20 percent in the year ending in the third quarter of 2022, FHFA says. Fitch estimates home values are overpriced by 22.6 percent. Local incomes present a challenge: At $77,400, the typical family income is below the national median of $90,000.

A year ago, Fitch named Boise, Idaho, the nation’s most overvalued metro area, but the housing market there has since calmed. Prices fell 1.8 percent from the second quarter to the third quarter of 2022, FHFA says. Even with the pullback, Fitch reckons Boise prices remain overvalued by 20.5 percent. Like many regions in the Mountain West, the city has experienced an influx of new arrivals from California and Seattle in recent years.

At a state level, Hawaii, South Carolina and North Carolina were the most overvalued housing markets, Fitch said.

Are Buffalo home prices really overheated?

Generally speaking, the Buffalo metro area is an oasis of housing affordability. The median home price in the third quarter of 2022 was just $223,000, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index. However, as modest as that sum is, home prices in Buffalo have doubled in the past five years.

“We’re finally catching up and becoming a big city,” says Joel HusVar, broker at HusVar Real Estate in Buffalo. “We were just long overdue.”

Rosalind Burgin, president of the Buffalo Niagara Association of Realtors and an agent at Mootry Murphy & Burgin Realty Group in Buffalo, offers a similar assessment. First-time buyers can find starter homes here for as little as $150,000, she says: “There’s still affordable housing in the Buffalo market. I just think our prices were low for so long that they’re starting to catch up.”

HusVar and Burgin both say they’re seeing remote workers and investors buy homes in the metro area. Those trends can push values beyond historical norms.

Even though Buffalo’s home values are well below national levels, the region isn’t immune to another trend that’s squeezing buyers: Property prices are growing much faster than incomes. The median family income in Buffalo is $87,700. That’s an increase of 14 percent over the past three years — but home values have soared 39 percent in the same period.

Source: bankrate

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Many think of the Dallas real estate market as the best of both worlds: a big city with endless suburban and rural areas within reasonable driving distance; a growing population and plenty of demand, but ample room to expand; rising prices and plenty of big-ticket buyers, but a pricing base indicative of Texas and the rest of the south that doesn’t get too prohibitive.

While homebuilders appear to be pulling back the scale on plans for new development and consumers are less optimistic than they were at the start of 2022, the Dallas-Fort Worth metro area is seeing ongoing rent and home price growth.

Using information from the U.S. News Housing Market Index, we’ve compiled the data you need to get a grasp on the current state of the market. Here’s what you should know about the Dallas housing market in the recent past, now and looking ahead into mid-2023.

How the Dallas Housing Market Changed in 2022
Looking at permits for new construction of residential housing in the Dallas-Fort Worth area, you may think it’s a tale of two different cities when comparing single-family and multifamily construction, based on data from the U.S. Census Bureau.

The Dallas market had 2,188 single-family home permits approved in December 2022, a 34% decrease compared to December 2021.

Approved permits for single-family homes in the Dallas market reached a five-year peak in March 2022 with nearly 6,000 approvals, and it has largely declined since. In the final three months of 2022, there were 7,088 single-family home permits approved, a 32% decline from the same time period in 2021, which saw 10,570 single-family homes approved for construction.

The majority of single-family construction in the Dallas market is occurring in the suburbs, where there is available land. The outskirts of the metro area is also where more affordable new construction houses are likely to be. If you’re looking for a new house between $300,000 and $600,000, “you’re going to be an hour outside of Dallas,” explains Damon Williamson, managing partner and principal broker at The Agency in Dallas.

There is residential construction activity closer to the center of Dallas, but it’s geared more toward higher-density options. “You’re seeing the multi-unit type development and lots of apartments,” says Belinda Epps, broker and owner of Epps Realty in the Dallas metro area and 2023 president of the MetroTex Association of Realtors.

Multifamily housing construction appears to be picking up steam in the Dallas area as well. Multifamily housing permits had more than 3,102 units approved in December 2022, an 86% year-over-year increase.

The final three months of 2022 saw more than 9,291 units approved for construction, a 71% increase compared to the same time period in 2021, when permits were approved for just under 5,420 units.

Dallas Housing Supply and Demand
While the availability of homes on the market has increased, overall, since spring 2022, December’s supply took another dip. There were 2.3 months of housing supply in December, according to Redfin – on par with the national housing supply, also at 2.3 months, and roughly double what there was in Dallas in December 2021. However, November 2022 had about 3.12 months of housing supply.

The dip in marketed homes for sale may be an indication of a return to ample homebuyer interest, which area real estate professionals are saying appears to be the case, if at a less frenzied pace than in 2021 and early 2022.

“I had a multiple offer situation last week that had 15 offers on it,” Williamson says. He adds that the buyer he was representing ultimately lost out on the deal despite bidding over the asking price – the winning bid was $70,000 over asking, a cash offer and waived all contingencies.

Fortunately, Williamson says that kind of situation appears to be more of an outlier these days, though multiple bids on a home still happen about 20% of the time.

In rental properties, there was a 6.6% vacancy rate in December 2022, down 1.4% year over year, according to the U.S. Census Bureau. The Dallas metro area’s vacancy rate is slightly higher than the national vacancy rate was 5.8% in December.

Looking at mortgage applications, the Mortgage Bankers Association reports its seasonally adjusted Purchase Index decreased 10% as of Feb. 1, 2023, compared with the week prior, indicating a drop in mortgage loan application volume for new mortgages. The unadjusted Purchase Index was 7% above the previous week, and 41% down year over year.

At the same time, consumer sentiment in the Dallas market was 59.7 out of 100 in December 2022, based on the Survey of Consumers from the University of Michigan. That’s a 10.9-point decline compared to one year prior, but much higher than the national consumer sentiment score of just 31.

Median Home Price in Dallas
The median price for a home in the Dallas market in December 2022 was $402,000, a 5.2% increase year over year, according to Redfin data. The median price is down from its historic peak in May 2022, when it reached $463,000, though most parts of the U.S. saw historic peaks around that time as well – higher interest rates have led prices to ease up since then.

Dallas’ median home price is above the national median home price of $388,000, and is also outpacing national price growth. The national median price is up just 1.6% year over year, according to Redfin.

The rental market in Dallas, on the other hand, has seen no downward slope thus far. The median rent in the Dallas-Fort Worth metro area is about $2,000, an 8% increase year over year, according to Zillow data.

Rent in Dallas is roughly on par with the national median rent, which was $1,981 in December 2022.

Impacting home prices in the Dallas market are demand and construction activity, in particular. There are roughly 2.84 million households in the Dallas-Fort Worth metro area, according to the U.S. Census Bureau.

Construction costs in the Dallas area, like the rest of the U.S., are on the rise – 15.4% higher in December 2022 than the same month in 2021, based on the U.S. Census Bureau’s Construction Price Index, which rated the national construction costs at 193.6 in December.

Of course, the biggest impact to buyer affordability is mortgage interest rates – the average interest rate for a 30-year, fixed-rate mortgage in December was 6.36%, according the Freddie Mac. Since then, the average interest rate for a 30-year, fixed-rate mortgage has continued to drop, reaching just 6.09% as of Feb. 2, according to Freddie Mac.

Williamson says the major reason buyers were backing off of home shopping during the latter half of 2022 to interest rates, in combination with high home prices. “The money was talking more than anything else – monthly payments were talking more than anything else,” he says.

Unemployment Trends in Dallas
More than 4.23 million people were employed in nonfarm positions in the Dallas market in December 2022, with an unemployment rate of just 3.3%, according to the U.S. Bureau of Labor Statistics.

While unemployment is low across the U.S. – the national unemployment rate was just 3.7% in December – the Dallas market is faring a bit better.

Construction jobs in the Dallas market are also up, with more than 32,600 in December, according to the Bureau of Labor Statistics, an increase of 2,400 compared with December 2021.

High employment rates in the Dallas-Fort Worth area are helping to keep mortgage delinquencies and foreclosure activity in the area low – foreclosure filings are still below pre-pandemic levels, at just 0.3% as of October 2022, according to Black Knight Inc. data. The foreclosure rate is 0.1% higher than the same time in 2021, but still well below what’s considered normal for the market.

Builder Confidence in Dallas Improves, but Barely
Homebuilder sentiment in the Dallas metro area was rated just 35 out of 100 in December, according to the National Home Builders Association and Wells Fargo Housing Market Index – a decrease of 54 points compared to December 2021, but a very slight increase compared to November 2022, when it hit a low of 33.

Compared to the national homebuilder sentiment, at just 31 in December, Dallas builders seem slightly more confident about buyers’ ability to purchase new homes in the future.

For new houses already constructed, builders are willing to make a deal. Epps says she’s seeing homebuilders dropping the asking price on completed new construction homes $20,000-$30,000 in the Dallas suburbs. “They’re dropping prices to move the inventory,” Epps says.

The amount of demand in Dallas and number of people moving to the area makes it more likely for builders to keep moving on construction than other parts of the country, even if it’s not at the same pace as 2021 or early 2022, Epps explains. “Are they building again? Yes. Are they building a whole lot? No,” she says.

Construction for nonresidential buildings appears to be waning in the Dallas area, based on the Architecture Billings Index from the American Institute of Architects. The index score was 48.6 in December 2022, down 7.8 year over year and continues on a downward trend from the five-year high of 61.2 in January 2022.

Dallas Real Estate Market: Predictions
Low unemployment, year-over-year increases in median home price and anecdotal evidence points to a housing market likely to see similar results as we move forward in 2023, if at more of a balanced pace between buyers and sellers compared to 2021 and early 2022.

However, the decline in consumer sentiment and even lower builder confidence means there may be some drop in demand as well as supply as we look ahead.

The U.S. News Housing Market Index predicts more than 20,600 new permits for single-family home construction will be approved between January and May this year. However, the forecast for housing permits in December 2022, at 3,701, was well above the actual reported number of 2,188.

The forecast of multifamily housing unit permits has been much more conservative, predicting just less than 9,400 units to be approved in the first five months of 2023. Based on the upward incline of multifamily permits at the tail end of 2022, it would be reasonable to expect the actual number of permitted units to be higher than predicted.

Epps expects to see some slowing of price growth and a continued slowdown in construction activity, but the Dallas metro area’s population growth and business activity seems to keep demand for housing strong – she notes that there’s no way to build fast enough to meet the number of people moving to the area. Even if a recession hits the U.S. in 2023, housing market activity will continue, she says.

“We’re still going to be buying, we’re still going to be selling. And we’re still going to be building,” Epps says.

Source: us news

The post Dallas Housing Forecast appeared first on Amora Escapes.

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Home prices hit all-time highs in 2022, with the median price increasing by 50% from January 2020. High mortgage rates have slowed down the housing market considerably, with Redfin predicting that the median U.S. home price could drop by close to 4% in 2023, posting the first year-over-year decline in a decade. Home sales will also decline, falling to the lowest level since 2011, a drop of 30% from 2021. While many areas are already experiencing a decline in prices, some are expected to be even more expensive this year.

Places where prices will drop the most
Pandemic migration hotspots like coastal cities and those in the Sun Belt saw the most significant increases in the housing market frenzy in the aftermath of COVID-19. Home prices in Malibu, California surged by 82% from the first quarter of 2021 to 2022. The East Coast also saw record gains, with the average home price of the Hamptons in New York increasing by 25% and the number of homes available falling to a record low.

Home prices went up the most in cities such as Austin, Boise, and Phoenix, which were prime destinations during the initial phase of the pandemic. These places are expected to see the most volatile prices since there is a lot more room for prices to drop compared to areas that didn’t see as much growth.

Prices that will see prices go up
Climate-risky areas like the hills of California and oceanfront property in Florida will see prices continue to go up primarily due to high insurance costs. According to Redfin’s data, disaster insurance premium rates will continue to rise, offsetting any price declines in these areas. Insurance premiums in Florida increased by 33% last year, and are expected to go up even more due to Hurricane Ian, the deadliest hurricane to strike the state of Florida since 1935. The hurricane was also the costliest in Florida’s history, causing $113 billion in damages.

Many insurers have stopped issuing policies on high-fire-risk homes in California. This means that the only insurance companies homeowners in these areas have to access are two to three times more expensive. Even FEMA flood insurance premiums have gone up. With disaster insurance required for a mortgage in these high-risk areas, the majority of those who can afford these types of homes are wealthy all-cash buyers.

A home is the most expensive purchase many people will ever make in their lives. When taking into consideration the total expenses of homeownership, make sure you take into account insurance, property taxes, and maintenance fees before you pull the trigger on buying a home. The dramatic increase of insurance premiums will offset any home price decreases seen in some areas. Buying a home should be based on your personal financial situation and it is important to budget all the costs you can expect to incur.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool’s editorial content and is created by a different analyst team. The Motley Fool has a disclosure policy.

Source: USA TODAY

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Falling prices may be luring buyers back into the U.S. housing market, but don’t let that fool you — homes are still far from affordable.

Prices in many U.S. housing markets have been declining over the past year and buyers are starting to make purchases again. But is now the right time to buy?

A careful look at the cost of mortgages over the past couple years suggests that prices aren’t nearly as low as they could be, and that over the life of a mortgage, buyers are actually paying far more for their homes than they would have in 2021 when housing prices peaked.

Two solutions are needed to address this affordability crisis: buyers need to fully leverage their negotiating power, and cities need to encourage new housing.

As an example, consider John, who found his dream home: a two-bedroom, two bath townhouse, close to his job, with enough space for his family, and good access to everything they need. John was hesitant to buy — prices were high and still rising — but on Nov. 10th, 2021, he closed the deal. He bought the home for $400,000 on a 30-year fixed rate mortgage with a 20% down payment and a 2.98% interest rate. It was perfect: only $1,346 a month to service the mortgage.

But what if John had waited a year? National average interest rates on that type of mortgage were 7.08% in November 2022. If he had closed on the same home for the same price a year later, with 20% down, and a 30-year fixed rate mortgage, his mortgage payment would have been $2,146 per month — almost 60% higher. John might not have been able to afford his dream home if he had waited for prices to fall, and would have had to settle for something smaller and less convenient.

Now consider the example of John’s friend Carla, who waited to buy. Price spikes forced her to put homeownership on hold. But lately, Carla is seeing price cuts and hearing stories about how the market is starting to recover. Now seems like the time to buy.

Carla finds a home valued at $400,000. She has good credit and enough money saved for a 20% down payment, but the monthly payment is the big concern. Assuming she could get an interest rate close to the national average of 6% — twice as high as what John’s mortgage was in 2021 — she would have to negotiate the price down by $95,000 if she wanted to have the same monthly mortgage payment as her friend.

That’s a cut of almost 25% of the total price of the home. No major U.S. city has seen prices fall far enough to make a home in early 2023 as affordable for homebuyers as it was in late 2021. Even in areas where prices are still being cut, buyers need to be careful not to buy too quickly.

Prices can and should be brought down further. Buyers need to leverage their negotiating power to pull them down as far as possible.

Of course, negotiating prices can only do so much. The Federal Reserve has been attempting to drive down prices by pushing up interest rates, but the effort so far hasn’t been effective. Lower prices lure buyers; things won’t be more affordable in the long term without broader fixes to the market.

For many of the regional U.S. housing markets, the ultimate problem is limited supply. Housing advocate Up For Growth estimates that the current housing supply deficit in the U.S. is more than 3.5 million units, with other estimates suggesting it could be as high as 20 million.

Buyers can leverage their negotiating power to bring down prices, and the Fed eventually will start to cut interest rates. In the meantime, the U.S. needs more housing. Municipalities need to do all they can to pave the way for developers: loosen density restrictions; shorten permitting times and untangle the red tape — especially for affordable housing.

Until that happens, affordable housing will remain out of reach for most Americans. Among buyers who can even afford to consider returning to the market now, buying a home, particularly in strained coastal housing markets, is an expensive project. Prices can go down further, and buyers should put pressure on both government and the market to see that they do.

Source: marketwatch

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