Foreclosures Are a Hurdle to New Building Activity

Posted on February 11, 2009
Filed Under Foreclosure Homes | Leave a Comment

Foreclosures are a hurdled to new building activity and it is apprehended that this trend will continue till 2011. The builders of Tucson are facing competition from foreclosed houses and not from each other. It is the repossessed houses that are winning and selling faster than the new ones.

Foreclosures depressed the building of new houses and brought down the prices of existing ones in 2008. This trend in the real estate market is feared to continue at least till 2011 commented John Strobeck who has authored Southern Arizona Housing Market Letter.

In 2008, of all the houses sold, 18.5% came from the foreclosure category. It reached its peak touching 30% in December last year. The average price of a residential house in metro Tucson was $217,393 towards the close of last year. Strobeck thinks that it will drop to $175,000 in the current year. In March 2008 the average price was $200,00 but it nose-dived to $165,000 in the last month.

Last year 12.4% of the new houses were sold below $150,000. In 2006 a house in this price range did not exist said Strobeck who owns Bright Future Business Consultants. He said, “Here is the reason we’re seeing all this. There’s a thing called foreclosure. That is becoming a huge part of our market. That is the most significant part of our problem.” He was addressing about 200 listeners who were attending his review on new construction.

In 2008 there were 9,000 foreclosure postings in Tucson. Strobeck expects the market to absorb 13,000 foreclosed units within 2011. Under normal conditions this number (inclusive of foreclosed and new houses) is disposed off in a year. In tune with the mood of the market new permits for construction will come down to 2,000 and then slowly start creeping up to 2,500 in 2010 and 3,000 in 2011. All the figures are less the figures of 1992.

Strobeck that in coming to terms with the new situation the builders should buy the foreclosed units, repair and then sell them. He said, “I’d like to see builders buy foreclosed homes, remodel them and resell them.” He is adding the prices of foreclosed house in his monthly report tabulating average prices for new and resale units. He admitted, “There’s no reasonable fix that I know of (for the foreclosure epidemic). The nice thing is it’s temporary problem. We’ll get through it. It must run its cycle.”

Popularity: 7% [?]

Related Tags

Nobody landed on this page from a search engine, yet!

Comments