Inventories of foreclosed homes have begun to shrink across the country and homebuilders are beginning to take notice. This spells a better future for some builders in many parts of the country.
According to economist Paul Diggle of Capital Economics, there has been a steady drop in the supply of foreclosed homes due to several factors. Many lenders are not eager to dispose of their foreclosure inventory creating some of this shortage. Short sales have also presented less of a loss to lending institutions and they are more actively seeking this alternative than going through with a foreclosure. The fact that investors are buying a large number these distressed properties has also led to the dwindling supply of housing.
Diggle states that “distressed sales made up only 22% of all sales in September down from 33% at the start of the 2012.”1
Tighter lending guidelines are giving homebuilders the opportunity to sell their inventory with in-house financing faster than they have in the last few years and many are aggressively marketing their homes with this added benefit to the home buyer. Although only some builders are proceeding with new developments, many will follow in the next year or two says Diggle.1
In spite of the general popular opinion, some economist like Diggle see the beginning of the end of the housing crises and some homebuilders are feeling more and more confident.
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This information is intended to be used as a general guide. It is not intended to constitute legal advice and is not a substitute for the advice of an attorney. While every effort has been taken to present the information accurately, this document may not be infallible. No warranty is made that these materials are current, complete, accurate, or suitable for any particular purpose. You should seek advice from your attorney before proceeding with any real estate transaction.
Source(s):
Shrinking Supply of Distressed Homes Makes Room for Homebuilding, Tory Barringer, 10/25/12, DS News, http://www.dsnews.com/articles/lack-of-distressed-homes-makes-room-for-homebuilding-2012-10-25 , Date Retrieved (10/26/2012).
