Builders Gearing Up To Compete With Foreclosures
More banks are investing thousands of dollars to fix up foreclosures in trying to spur sales and appeal to a broader buying pool. Banks have inherited plenty of foreclosed homes that have everything from water damage, mold, broken windows, and missing plumbing fixtures. But while banks used to be hesitant to invest much money in fixing up these homes, more real estate pros say that banks are heeding their suggestions for repairs and seeing the benefits of how a little investment can make these properties more sellable. As such, they are paying for new paint and carpet, refinishing damaged floors, replacing old windows, and repairing leaky roofs. They hope to extend the foreclosed homes’ appeal past traditional investors and professional rehabbers. For example, home buyer would have trouble securing a loan on homes that lenders deem “uninhabitable” because of needed repairs. The banks interest in fixing up these properties also can help the overall real estate market because the foreclosed properties can sell at a higher price. Real estate agents say they are making more suggestions to banks on how to spruce up the properties. First, they identify the target customer for a property. For example, if the home will likely appeal to owner-occupant, agents may recommend fixes such as paint to $25,000 kitchen remodel. Source: Chicago Tribune
Meanwhile, there is plenty of reason for them to change their strategies..
New home sales fell 16.9% in February, to the lowest level since the government began keeping records in 1963, as the reeling housing market failed to generate any momentum. Sales fell to an annual rate of 250,000 from the revised 301,000 in January, according to the Census Bureau’s monthly report released Wednesday. The rate was down a whopping 28% from the 347,000 of February 2010. “We’ve been running at a very low level,” said John Canally, an economist with LPL Financial, a Boston-based financial adviser. The release followed last month’s downbeat report on existing home sales, which fell 9.6% month-over-month. “New home sales are even more crucial to the nation’s economy,” said Canally “It’s the new home sales that actually drive economic activity and contribute to GDP.” New home builders hire construction workers and buy building materials from domestic sources, contributing much more to the economy than people just trading one existing home for another. Particularly bad winter weather this year probably added to market woes. Sales dropped precipitously in the Northeast and Midwest, which experienced some frigid and snowy days during the month. Sales, though, were down across the board, falling in all four regions. A better sign for the market was the number of new homes in inventory. That remained at 186,000 in February, a 40-year-plus low, according to Canally and only about a third of the number of new homes on the market during the peak months off 2006. Source: CNN/Money