Jan 02 2008
Increase in Construction Spending leads to Consumer Headaches.
Snow is typically not a reason for a lack of recent posts. So we’ll claim its the holidays. Hope everyone had a Merry Christmas and a very promising new year.
Back to the post. The new construction housing market actually spent more this month than the month previous, ok so it was just .1% more, but anything at this point is a positive. The previous month recorded a .4% drop. The increase is due in large to an increase of monumental size projects such as schools, power plants, and factories according to bloomberg.com. At this point in time I would imagine that moderately priced new construction will begin to pick up to make way for the spring season. Where this article resides from (Belvidere, IL), there has been a recent increase in land/ lot sales, and construction companies building quite a few spec homes, or homes that are speculated to sell upon completion.
Now there isn’t much room for error with these newly constructed homes, in fact, this time last year as I was looking for a new home to purchase on the “good” side of the city, the new construction was reasonably priced at $199,900. This year the prices have indeed dropped. The same house with the same amenities is now $187,900. Whether the materials are actually less expensive is a mystery, but somehow they have managed to pull out about 7% of the value of the home and lower the price to entice growth and home sales. ALSO…..
The company is currently offering $5000 towards any upgrade or even towards the final purchase price. So the market has indeed dropped considerably. I remember hearing rumblings across the Internet of people very distraught about the value of their homes compared to the new pricing of contractors. A community in Florida had been selling estate type homes for $700,000 and they were considered fairly priced. Now the construction company has come in and created some very similar houses and thrown in the extra amenities for $495,000. Well, this doesn’t sit well with those that bought the previous year, and the current home owners wanted to know if there is any legal action they could take to prevent the home from being sold so inexpensively. Unfortunately that is the market. Negotiating power has never been stronger. The rental market should be growing exponentially in the next months so perhaps if you have an egg saved for a rainy day, it might be time to consider that rental property you have always wanted. Renters like renting because they won’t be out an entire house if they can’t afford the payment, just a deposit, and a place to live.
Anyway, I hope you enjoyed the tangent, and things may start to head the right direction. It sounds like “W” has his ducks in a row and the mortgage market is ready for fresh blood. Have a safe new year.
[…] Increase in Construction Spending leads to Consumer Headaches. Increase in Construction Spending leads to Consumer Headaches. Published by jallen under Buying, Market Uptick, Selling Snow is typically not a reason for a lack of recent posts. So we’ll claim its the holidays. Hope everyone had a Merry Christmas and a very promising new year. Back to the post. The new construction housing market actually spent more this month than the month previous, ok so it was just .1% more, but anything at this point is a positive. The previous month recorded a .4% […]