Pulte Homes Chief Executive Officer Richard Dugas believed that the bank foreclosure list is nearing its end and he could steer his home building company towards recovery after suffering over $500 million in losses due to the housing market crisis.
The Bloomfield Hills, Michigan-based home builder’s financial loss in the first quarter of this year was attributed to the deteriorating labor market, declining consumer confidence and tighter mortgage credit.
According to Dugas, the housing market crisis has created both supply and demand problems. He cited foreclosures as the main cause of the supply problem in the housing market. On the demand problems, he cited consumer confidence, difficulty in selling existing homes and mortgage availability as causes.
Dugas said that these causes of supply and demand problems are being addressed gradually. He claimed that foreclosures are still flooding the market and there is no sign that it is abating. However, the problem of foreclosure is partly being absorbed, Dugas said, noting that since March about half of all resales have been foreclosure properties.
Meanwhile, on the issue of consumer confidence, Dugas said that cheap foreclosed homes and low interest rates have enticed homebuyers and investors. And when consumers start feeling confident about the future of the housing market, the difficulty of selling existing homes will begin to ease.
On the problem of mortgage availability, Dugas credits the program of the Federal Housing Administration (FHA). He explained that a traditional mortgage requires a 20 percent initial payment, which could be quite high for some homeowners. But if homeowners have good credit, they need only to make a down payment of about 3.5 percent to avail of an FHA loan.
He believed that the housing market is seeing the end of the bank foreclosure list, noting the lessening home price decline. He pointed out that stabilization has to be achieved first before things could start to improve in the housing market.
On the other hand, Dugas wants the federal government to implement a larger tax credit. He believed that a bigger tax credit should be made available to all homebuyers to make the Obama Administration’s foreclosure prevention program becomes a success. He added that first-time homebuyers could play a big role in reducing the number of properties in a bank foreclosure list.
John Cutts has been educated in the finer points of the foreclosures market over 5 years. Read foreclosure listings articles at ForeclosureListingsNationwide.com - Your online source for Foreclosure Listings.
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