Building Blow-Out
The home building market has slowed down dramatically since builders have decided to stop feeding the glut that has formed. According to an article in CNN Money, there are currently 132,000 new homes on the market, a rise of 28% from last year, and this enormous surge in availability has caused builders to think twice before pursuing further construction projects.
Another practical upshot of this overabundance of new homes is its effect on the real estate market. With so many homes available, home buyers are no longer feeling pressured to quickly buy anything they can afford, or pay inflated prices for the houses that they are considering. Consequently, more than one in three housing markets has experienced declining prices, according to the National Association of Realtors. Further, Zip Realty, a brokerage, also published that anywhere between one fifth and one half of homes on the markets it operates in have been discounted. It appears that these rapid changes may be at least one of the factors contributing to rise of a buyer’s market in place of the seller’s market that so recently held sway.
-Tony Floriani
[...] It turns out that in some markets, purchasing a newly built home can have hidden benefits. Due to the real estate slowdown affecting so many areas, there have been substantial cutbacks in building projects, but builders are still stuck with their excess inventory. With this glut in the market, some builders are now willing to offer major incentives to potential buyers in order to rid themselves of their costly existing houses. Other firms, such as Internest, offer buyers a rebate on new building projects. That means that families who want to move into single-family homes, but thought they could never afford the switch may now be able to make their dreams a reality. [...]
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23 Aug 06 at 12:03 pm