Wednesday, March 23, 2011

NEW HOME SALES TANKING

According to the latest reports from Washington, buying a new home right now does not make good financial sense.  WHAT?


With all the short sales, foreclosures and resales on the market, the price of a used home has dropped to a median price of $156,000.  The average new construction home is now 48% higher than a resale home, about three times higher than the market for new homes need to survive.  It isn't that new homes are going up in price, it's that used home prices are dropping like cruise missiles on Libya.  The median price of a new home is $230,600.  Honestly, which would you buy this year?

Even though new homes represent only a small fraction of sales, the impact of lower sales will start to bring construction to its lowest point in years.  A sluggish new home market is bad for the economy. 

Slowed by those higher prices, new-home sales have plummeted over the past year to the lowest level since records began being kept in 1963. By contrast, sales of previously occupied homes have only fallen 3 percent in the past year.

An average of three jobs and $90,000 in taxes are created for each home built, according to the National Association of Home Builders.

There are other factors going against new home purchases this year.  With all the foreclosed and short sale homes closer to the buyer's workplace, fully landscaped and usually within an easy drive to shopping and schools, these homes have a tremendous appeal.


There is one final thing holding back buyers from purchasing a new home....banks!  With 3 million foreclosed homes hitting the market this year, banks have a vested interest in making deals on those homes while making the regulations and rules tough on the purchase of a new home.

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