It has been four years since the real estate bubble burst, but its affects are still strongly in place. Nowhere is this truer than in the market for newly constructed homes. This situation drags down the overall economy and recovery as well, since it is acknowledged that building a new house creates on average three new jobs for a year and causes roughly $90k in various sorts of taxes to be collected.
At first glance the numbers of used homes that are being sold don't look all that terrifying. The figures are down a bit over 10%, and this is certainly significant. This pales in comparison with the level of sales for new homes which is down by more than half over what is normal. In fact the figures for sales of new homes in 2010 were the lowest in the fifty years that the government has been keeping records. The pace that is being set in 2011 is even lower still. Based on February, 2011, new home sales, the annualized rate is only 250,000. In 1963 the number of new home sales was over 500,000, and since then the population of the U.S. has increased by almost 120 million people.
There are quite a few reasons for the lingering crises in the housing market. Certainly the fact that home loans are more difficult to qualify for than they were a few years ago is a factor. This is, of course, a good thing because low standards, or in some cases no standards at all, were one of the main reasons for the housing bubble. The biggest of all problems, however, is the huge number of foreclosed and empty homes on the market. The census bureau reported this week that almost one out of every five homes in the entire state of Florida is sitting empty, an astounding figure.
Considering that Florida is a populous state with a population of 19,000,000, this means that there are roughly of a million vacant properties in that state alone. In Arizona and Nevada the census figures were 16% and 12% respectively.
New homes are trying to justify much higher prices, but this is getting harder and harder to do. Average prices for used homes continue to go down, and the difference between new and old at this point is upwards of 30% on average. Buyers are finding the low prices of already lived in properties too tempting to resist.
On top of this there is the famous "shadow inventory". These are homes that are not yet for sale, but the foreclosure papers have already been filed, and the process has begun. A good number of these homes will eventually be foreclosed upon, so there is still along way to go before the housing market stabilizes.
At first glance the numbers of used homes that are being sold don't look all that terrifying. The figures are down a bit over 10%, and this is certainly significant. This pales in comparison with the level of sales for new homes which is down by more than half over what is normal. In fact the figures for sales of new homes in 2010 were the lowest in the fifty years that the government has been keeping records. The pace that is being set in 2011 is even lower still. Based on February, 2011, new home sales, the annualized rate is only 250,000. In 1963 the number of new home sales was over 500,000, and since then the population of the U.S. has increased by almost 120 million people.
There are quite a few reasons for the lingering crises in the housing market. Certainly the fact that home loans are more difficult to qualify for than they were a few years ago is a factor. This is, of course, a good thing because low standards, or in some cases no standards at all, were one of the main reasons for the housing bubble. The biggest of all problems, however, is the huge number of foreclosed and empty homes on the market. The census bureau reported this week that almost one out of every five homes in the entire state of Florida is sitting empty, an astounding figure.
Considering that Florida is a populous state with a population of 19,000,000, this means that there are roughly of a million vacant properties in that state alone. In Arizona and Nevada the census figures were 16% and 12% respectively.
New homes are trying to justify much higher prices, but this is getting harder and harder to do. Average prices for used homes continue to go down, and the difference between new and old at this point is upwards of 30% on average. Buyers are finding the low prices of already lived in properties too tempting to resist.
On top of this there is the famous "shadow inventory". These are homes that are not yet for sale, but the foreclosure papers have already been filed, and the process has begun. A good number of these homes will eventually be foreclosed upon, so there is still along way to go before the housing market stabilizes.
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