Todays headline! No it wasn't in the Washington Post or NY Times. For the most part 2007 would be considered a good year for buyers in many major markets in the US.
This is the headline in today's London newspaper. The reason? Housing pricing have risen 34% since 2002. As a result first time buyers are not able to afford the homes that they could before. Average prices in London rose 15% in 2007. These headlines come at the same time that the Bank of England has lowered interest rates to try and increase the buying power for buyers.
Does this sound familiar? To anyone in the Northern Virginia area it could mirror the appreciation rates we had between 2001-2005. The concern for many in London is that they could follow the same pattern as the US. Today I spent a good deal of time talking to a group of young home buyers in the UK about their market and asking for their thoughts on the US market housing market. It is interesting to see how savvy these folks are about world markets and economies. They opinions varied but the concerns were the same. If they didn't already own a home they didn't see themselves buying one while the market continued to rise.
In London a single or couple looking to buy their first home are most likely to buy a "flat" somewhere close to an tube station. Most of them are looking at flats are less than 800 square feet which will run close to 225,000 pounds. Only one in four buyers area able to buy a terraced home and only one in eight a semi-detached. In order to buy a home they need to have a deposit of close to 60,000 pounds in the bank which they can use to get an off-set mortgage. My daughter and her husband decided after two years living in London that they only way they could afford to buy was to leave the city. They are now 2 hours outside of the city, fortunately they do not have to commute to the city to work but it does show how far families have to go to find "affordable" housing.
This is much the same as Northern Virginia when prices close in became to high families headed towards Stafford and Loudoun County to buy more affordable housing. The trade off for many of those families is the 1.5-2 hour commute to DC to work. The biggest difference between the younger set in London and the same age clients I have in Northern Virginia is the expectation of the size of their homes. Here everyone is quite happy to find a flat with less than 1000 square feet and find that they have plenty of room. Families live comfortably in much smaller houses than most people in our area would even consider. The idea of a "McMansion" to them is just "crazy".
For now the rental market is booming and buyers are having to wait out the boom to see if there will be a slow down. So just a little news from across the pond to break up the usual Northern Virginia market reports.
Blogging from the UK:
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