Home Building Up Despite Presence of Foreclosed Homes Listings- By: John Cutts
The presence of cheaper properties under foreclosed homes listings has been partly blamed for the slow down in the home construction market. However, although foreclosures have remained high last year, December statistics showed that home-building has risen to its fastest pace in almost two years.
According to housing industry experts, the huge supplies of low-priced bank and government foreclosed houses did not prevent the house construction market from posting strong numbers in December 2010. The figure for the sector was largely aided by increased apartment construction projects as renters outnumber homebuyers for the month. However, single family residential construction declined, showing that foreclosures still impact the home-buying market.
Although bank owned home foreclosures reached record highs last year, home builders broke ground on almost 600,000 apartments and new housing units in December of 2010, representing an increase of 14.6% compared with the same 2009 month. Single family dwellings accounted for almost 70% of total residential construction activities during the month, but posted a 1% decline to reach a total of 417,000 housing units.
The multifamily sector recorded a huge improvement, rising 80% when compared with year-ago levels to reach total units of 171,000. During normal market conditions, home builders work on an average of one million new home units a year. However, with cheaper properties under foreclosed homes listings vying for buyers' attention, new houses worked on by builders last year totaled only 587,600. Although this is better than the 2009 total of 554,000, the figure is still below the one million averages seen during normal market periods.
Housing market analysts stated that, aside from most people preferring to buy fixer uppers and other distressed properties instead of new houses, the house construction market was also affected by the snowstorms that hit most parts of the U.S., preventing sellers and buyers from making rounds and closing transactions. They also stated that until the huge amount of unsold properties are unloaded, the market for new single family houses will continue to suffer.
The multifamily construction market, however, has been doing well regardless of competition from foreclosed homes listings. Analysts have stated that they need to wait for a few more months to see whether the multifamily segment is really in a roll or it was just a seasonal increase.
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John Cutts has been educated in the finer points of the foreclosure market over 5 years.