A modest home foreclosure list growth in 2010 will be ably endured by homebuilders this year as the inventory of new homes has fallen substantially in many cities throughout the country, according to the chief executive of Hovnanian Enterprises.
New Jersey-based Hovnanian, which has been building homes since 1959 and has been recognized as a quality homebuilder over the years, said that the home building industry is now more prepared to bear further addition of foreclosures into the market as a lot of companies have made their operations leaner and more sustainable.
Additionally, the supply of residential units for sale in many places nationwide has gone below the normal level of six months. This means that the entry of foreclosures into the market will fill the gap, instead of overloading it.
Builders are also encouraged by the rising number of lenders that have slowed down in filing foreclosures and in completing them. Their increased willingness to negotiate short sales with distressed homeowners has also been making a dent on the number of properties entering home foreclosure list.
In January this year, the number of previously owned homes listed for sale has dropped to a supply level of about 8 months, down substantially from the record supply level of around 11 months in the third quarter of 2008. The 8-month supply level however marked a sharp rise from the November 2009 supply level of 6.5 months.
In Sacramento, among the cities hit hard by the housing crisis, the supply level for homes now is only about 2 months, far below the supply level of more than 12 months back in 2007.
In Orlando, Florida, the supply level is down to about 7 months, a sharp plunge from the 2-year supply level in the first months of 2008.
In addition, Hovnanian said that the Texas and Maryland markets are healthy based on past and current sales data.
Nevertheless, the chief executive of Hovnanian is still concerned about bleak predictions of foreclosures arising from the resetting of option adjustable rate mortgage loans. In addition, there are still talks about large numbers of shadow foreclosures and concerns about the redefault of mortgages that have been modified. The rising unemployment in many areas is also a persistent concern.
All in all, Hovnanian is optimistic that it can fight another home foreclosure list growth in 2010. This week, it reported that it finally rose from the doldrums and posted its first three-month profit since 2006.
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