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Foreclosures drive “New-home” slump, keeping door shut on U.S. recovery

By
Services for Real Estate Pros with Azren Foreclosure Help

 

2011 is shaping up to be the worst year on record for new-home sales. Foreclosures drive “New-home” slump, keeping door shut on U.S. recovery

 

On pace to post the lowest annual sales since the Commerce Department began keeping data in 1963, nationally in July, new single-family homes sold at a seasonally adjusted annual rate of 298,000.

 

The slump is pushing the key home-building industry into its fifth year of decline and keeping the U.S. economy from rebounding.

 
 

Builders' hyperactivity in the past years and the loss of hundreds of thousands of people's homes to foreclosure has left a big supply of properties on the market. It is a supply glut that is continually increasing even without a great many new homes being built.

 

Many economists don't see a significant rebound occurring until housing is fixed. The housing market's malaise is reflected in more than construction employment. It filters through to every business and every person and as witnessed by the collapse of many foreign economies, the effect is worldwide.

 

It is a lousy market. It is not getting any better and it could get a lot worse. There is a chance of a recession and that will probably drag housing prices down at least another 10%. Companies focused on legitimately helping property owners cope with the foreclosure mentality of banks are creating a nice niche market for themselves and will see a significant growth in their businesses.

 

 Foreclosures drive “New-home” slump, keeping door shut on U.S. recoveryNew home sales slower pace may be a kind of self-inflicted wound. The big companies are not dropping their prices. Sales of foreclosed homes are keeping prices low, and builders can't compete with those discounted levels. The home builders either don't want to, or can't, compete with the resales right now.

 

Although sales are bad, from a historical perspective, the number of homes available for sale also is very low. This will help recovery in the coming years----not months. Because as long as we have unemployment hovering above 9%, the sales rate is not likely to increase, and therein lies recovery.

 

Debbie Laity
CinaJones Real Estate - Cedaredge, CO
Your Real Estate Resource for Delta County

Delta County, Colorado is expected to post a record number of foreclosures before the end of the year. It's still not over for us.

Sep 16, 2011 02:13 PM
John McCormack, CRS
Albuquerque Homes Realty - Albuquerque, NM
Honesty, Integrity, Results, Experienced. HIRE Me!

Hi Aziz -

It's slower in Albuquerque but I did more in the first 6 months of 2011 than I did in all of 2010.  Things are slowing now that school has begun but that's to be expected.  I am now personally working with several relocation clients.  I hope and pray to hang in there till things turn around for all of us.  I think it will we just have to keep plugging along praying,  thinking positive and putting more effort into what we are dealt.  One thing I don't do is talk doom and gloom with my clients.  The number speak for themselves.

Best Regards from the Q 

Sep 16, 2011 02:33 PM
John Pusa
Glendale, CA

Aziz - Thank you for sharing very good information on foreclosures impact on the economy.

Sep 16, 2011 04:58 PM