Home Builders Sentiment Remains Low
Distressed Properties including short sales and foreclosures cut into new construction’s bottom line
According to the National Association of Home Builders, little has changed in the housing market over the last two years. Home Builder sentiment on “the condition of the housing market” was at an index level of 15, with any number below 50 considered negative. In the past two years Home Builder sentiment has not gone above an index level of 20. The year of 2010 marked the lowest level of home purchases in nearly 50 years with sales for the current year looking little if any better.
Mortgage Foreclosures, Distressed Properties Compete With New Construction
New Construction of Residential single family homes has faced new competition in the form of REO (meaning Real Estate Owned / Foreclosed) Properties as well as other distressed properties from estates, short sales and Deed-In-Lieu of foreclosures. Properties being sold for less than is owed against them often represent significant savings meaning that today’s cost-conscious buyers have many options available as compared to new construction.
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Causing Further difficulties are new, increasingly strict banking and mortgage regulations which make it more difficult for buyers to qualify for a home mortgage. Many would-be buyers are now relegated to renting when they would much rather purchase a home. Near record-low interest rates combined with great deals have encouraged many buyers to take the plunge but many more buyers cannot obtain financing for a home mortgage. Today’s new economy has certainly changed the financial landscape in America. Other buyers are tied up in trying to sell their existing home (which may be worth less than they think) with sales being hampered by low appraisals, financing difficulties amongst other complications.