Sources: Bloomberg, USA Today
Is more bad news on the horizon for the struggling American home market? According to some experts, the bottom may not have fallen yet. Home sales dropped again in March, and sales of new homes this year are at a 13 year low. Homebuilders have cut construction orders and prices, and new home construction is at a 17 year low. Not only are orders down, prices have fallen. The national median home price dropped from $213,500 in February 2007 to $195,900 in February 2008. Foreclosures have skyrocketed 60% over the past year.
This is not all bad news, however. The drop in home prices has led some to jump back into the homebuying market. First-time buyers, foreign investors, and out-of-state purchasers are looking to purchase rental properties at low prices. Eventually, many hope to sell it later when prices rise again.
The high rates of foreclosure have also led to a slight uptick in some housing markets. Areas such as Charlotte and Detroit have seen increased homebuying due to low prices. Foreclosed homes in other communities, especially the areas that still have jobs, are attractive because of its low cost.
Question: What measures can the housing and banking industries take to instill some much-needed confidence in the US home buying market?
2 comments:
Whatever they do, they need to act with a sense of urgency in whatever action they take. The housing/construction industry as well as the banking sector is acting like deer caught in headlights. The consumer is not going to be taken in by any half measures after a long pause when coming up with an answer. The swiftness of any industry changes introduced is just as important as the change itself in order to bring some confidence back into the market. In the end it comes down to leadership acting swiftly to correct a problem we know we are in.
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