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Mortgage lenders are viewed to be loosening lending towards borrowers with less-than-perfect credit as a way of drumming up business. Wells Fargo has started offering mortgages to subprime borrowers with credit scores of as low as 600. Non-bank lender Carrington has followed suit by lowering its minimum credit score requirement to 550. The lucrative mortgage refinancing market has weakened in the past year due to increasing mortgage rates, with the average fixed rate for thirty-year mortgages rising to 4.4% after it fell in May last year to near-historic lows. A Carrington sub-prime lender would be charged a 7.15% mortgage rate.
At present, the high end market has turned into a better location for investors. According to Bank of America Merrill Lynch, sales of properties worth over $1 million improved by over 14% over the past year, while those of properties valued at less than $100,000 fell by eighteen percent. Prices for higher-end houses also have seen much bigger increases. Zillow data demonstrated that the top third of the market, composed of houses worth $305,700 and above, increased in value by an average 3.38% annually over the previous eighteen years. These price increases were 20% higher than those seen by the bottom two-thirds.
Several important US markets may shortly be unaffordable for home buyers with typical incomes, according to property data company Zillow. Buyers in Miami, for example, will be unable to manage 62.5% of houses for sale, based on historical standards, while 57.2% of Los Angeles houses are viewed as unaffordable. Zillow estimated that nationwide 33.6% of houses are considered unaffordable. The growing development of affordability issues could be a warning sign of some other housing crash. While the market is not yet seen as being in a real estate bubble, some areas are already exhibiting the early signs of one.
A fresh forecast by Ernst & Young and also the Urban Land Institute said that commercial property trades will rise over the next couple of years to surpass quantities recorded in 2008. The report estimated that overall transaction values will reach $230 billion by 2016, making their prognosis more optimistic than last autumn's report. The prediction added that the total positive outlook for the US real estate marketplace is supported by expected on going developments in the greater economy. Commercial properties are also seen to enjoy overall yearly yields of 9.4% in 2014, of which industrial and retail buildings will do better than typical.
The housing market is facing an unusual dilemma as it goes into the 2014 spring buying scenario, since there are fewer sellers listing their properties and higher prices mean that the dwellings available are past the reach of willing buyers. Fewer homeowners have been persuaded to put up their dwellings by the 13.4% average increase in property prices recorded over the previous year. And the high-priced prices coupled with increased mortgage rates means that both all-cash investors and first-time buyers can't manage to buy. This implies the housing marketplace remains unhealthy five years subsequent to the recession's end.