The Dwindling Demand For New Homes
It wasn’t too long ago when we witnessed the craze of putting in an offer to purchase a new home. Sales offices opened and subsequently sold out quickly in record time. At the very least, there was a steady demand for new homes and builders were only too happy to provide consumers with yet another new subdivision in town.
Thanks to a weak housing market, sales for new construction housing projects are now at an all time low. The lowest it’s been since 1991, according to government figures and information released this week.
Builders are now being faced with the realization that they will not be able to sell their inventory as anticipated. With a weak and uncertain economy, bank’s are nervous about lending to consumers, and homeowners are nervous about purchasing, it doesn’t look like home sales will increase any time soon.
Analysts predict that if a consumer is smart and can find a bank willing to cover their mortgage, smart business investments are at hand with low interest rates and a lower than average sales price on homes; a consumer can get ahead provided the he or she realizes that it is a long term investment.
Real property is historically one of the most solid investments someone can make, you just have to be willing to let it sit, years if not decades usually.
It’s difficult to get ahead if you have to sell your home in order to purchase another. The real winners are those with extra capital and cash to put towards a second property strictly as an investment. They are in the minority and they will be the ones to benefit the most from these struggling economic times.
The bank’s low interest rates are there to help entice consumers to buy, but the bank’s have pulled back drastically on who they will approve for financing, making it difficult for the average consumer to benefit from these low interest rates.
Meanwhile, builders are pulling back drastically their operations in a bid to wait it out and hope that there will be a renewed interest and demand for new homes.
It does not appear that that will happen at all within the few months to a year so builders are forced to slash back prices on their existing inventory in an attempt to sell as quickly as possible.
For the consumers that have already purchased their homes and are waiting for construction to commence, will have longer than usual delays due to lack of sales.
Builders will be more reluctant than ever to commence a new project if their existing lots are still for sale. They will attempt to delay and continue to delay construction until they are in a stronger position financially in order to cover the costs of building in a new area or lot.