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Cheap Foreclosed Properties Hold Back Construction of New Homes

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By : John Cutts    99 or more times read
Construction of new houses declined in Indianapolis, Indiana for September 2010. According to housing market analysts, this is partly due to the huge supplies of cheap foreclosed properties in the city. Such properties are reportedly often preferred by the very few home buyers who are looking for deals. In addition, those few who are looking for homes just do not have the money to finance the construction of a new one.

With thousands of foreclosed dwellings to compete against, including Anderson distressed homes for sale, industry experts stated that they are not surprise that housing permits declined in September. According to the Builders Association of Greater Indianapolis, only 227 permits were issued in September in the nine counties tracked by the association. This represents a 23% decline compared with September 2009.

September 2010 is the fourth month in a row that permits for new housing construction have dipped in the city. This is largely attributed by industry observers to the continuous increase in the number of Indiana distressed homes and in the continuous rise of unemployment rates in the region.

Market analysts believe that the end of the government tax credit program is also part of the reason. They stated that since the end of the financial assistance program, more people are shying away from building new homes and those who are serious about getting a residence are opting for cheap foreclosed properties instead. The double digit gains in new permits recorded during the first 90 days of the year is also attributed to the tax credit initiative which is believed to have artificially padded market statistics.

According to economists, housing permits are significant measures of economic status, and judging from the very few permits issued, Indianapolis is still suffering heavily from the impact of the recession and the huge supply of distressed houses in the area. Despite the seemingly bleak economic outlook for the city, builders believe that the construction industry and the housing market have already hit bottom and are on their way up.

Some builders predict that by the end of 2010, house building permits will reach a total of about 3,000. They added that by 2011, permits will likely reach 4,000 as the city's economy improves and the number of cheap foreclosed properties diminishes.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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