subject: Foreclosed Homes Overwhelm Home Builders [print this page] Home builders in the United States are facing a competitor that they were not anticipating when they originally got into the business and that is the large number of foreclosures that are on the market to rival the homes for sale that were newly built. The real estate auction companies are coming out ahead of the home building ones by far.
An example of this is Real Estate Disposition. This year is only a few months in and over 7,000 properties have currently been sold for a total of over $382 million. The auctioned homes have gone up in price in the past year as well by close to 10% since the end of the year 2009. In the year 2009 6,351 homes were placed on the auction house. If more foreclosures occur, more and more are going to be put on auction houses. The homes are actually improving the economy on both local and national levels according to Rick Weinberg who is a spokesman for the business.
The statistics are pretty astounding with one in 438 homes across the entire country currently in foreclosure as of February 2010. However, many sources report that the flat number of foreclosures has actually decreased since last year giving some people hope that the real estate market will turn around and foreclosures will not happen as often.
New homes are not worth as much money because of the sheer amount of foreclosed homes that bring down the value of these newer ones. The value of new home appraisals is down significantly and customers who want to sell their homes are having trouble getting their asking price because the surrounding homes being placed at lower levels bring down the value of their properties as well. Individuals who build a home are finding themselves unable to retain even the cost of materials that they are having to cover.
A monthly survey is conducted by NAHB/Wells Fargo in order to determine how home builders feel on a month to month basis. It rates how satisfied home owners are with the current conditions in the market and what they seem to be facing in the near future as well. The most recent results which were conducted and gathered in March of 2010 stated that the index fell from its previous spot of 17 down to 15, a mere two points. The survey has three individual parts and all of them fell in the most recent findings. The components of the survey are the buyer traffic, current sales, and expected sales as well. The findings in the most recent survey are the lowest that they have been since March of the previous year but they are still a tad bit higher than the lowest. In order for the conditions to be improved, values need to be higher than 50. Any value below 50 places the market in the level of being poor.
Foreclosures have their benefits in a very small part of the economy for investors but for others such as residents in the same community foreclosures harm the area and drive down values of surrounding homes.
