You’ve heard the saying, “liars figure and figures lie.” Well when it comes to the homebuilding industry, no one knows what to believe. It has been stated that we need 1.7 million new homes each year in the U.S. In the past two years we have built about 1.1 million homes which theoretically puts us behind by 2.3 million homes!
When you look at the millions of foreclosures that are occurring in this country every year, you may be asking yourself why do we need more new homes when we have all of these existing homes that are coming on the market? Well, we have a finite supply of homes that were once occupied and now are not. What is going to happen to those homes and where are the people that were displaced going to now live? At some point, the banks will sell these foreclosed homes to investors who will in turn rent them back to the same people who used to live in them. That will absorb a huge portion of the existing housing inventory but not fill the new homes void.
What does that have to do with building more new homes? Well, there is going to be a slight hiccup in the foreclosure process due to the banks having to get their act together. Between banks not foreclosing or selling their properties and buyers being reluctant to purchase a foreclosed property due to title issues, there will be a shortage of houses available. Thus the builders see this as a window of opportunity to build more homes until the banks get it all figured out.
So what’s in store for builders after the banks get it together and foreclosures flood the market again? Well I don’t think anyone really knows, but I have to believe that a positive buyer confidence index will play a huge part in what happens. To cite a recent example, our new homes division has had its best two months in sales in the past two years. There was no logical reason why given that the stats from building permits and housing starts are at an all time low. What I can tell you is that people are feeling more confident and they are getting used to the new “normal.”
Looking ahead, I believe that a variety of factors will influence the rebound of the home building industry. These include the recent foreclosure delays at the banks, increase in job creation and a rise in buyer confidence. In any event if we, as consumers, rely on the statistics as our sole guide on what we should do, remember “figures certainly do lie!”
When you look at the millions of foreclosures that are occurring in this country every year, you may be asking yourself why do we need more new homes when we have all of these existing homes that are coming on the market? Well, we have a finite supply of homes that were once occupied and now are not. What is going to happen to those homes and where are the people that were displaced going to now live? At some point, the banks will sell these foreclosed homes to investors who will in turn rent them back to the same people who used to live in them. That will absorb a huge portion of the existing housing inventory but not fill the new homes void.What does that have to do with building more new homes? Well, there is going to be a slight hiccup in the foreclosure process due to the banks having to get their act together. Between banks not foreclosing or selling their properties and buyers being reluctant to purchase a foreclosed property due to title issues, there will be a shortage of houses available. Thus the builders see this as a window of opportunity to build more homes until the banks get it all figured out.
So what’s in store for builders after the banks get it together and foreclosures flood the market again? Well I don’t think anyone really knows, but I have to believe that a positive buyer confidence index will play a huge part in what happens. To cite a recent example, our new homes division has had its best two months in sales in the past two years. There was no logical reason why given that the stats from building permits and housing starts are at an all time low. What I can tell you is that people are feeling more confident and they are getting used to the new “normal.”
Looking ahead, I believe that a variety of factors will influence the rebound of the home building industry. These include the recent foreclosure delays at the banks, increase in job creation and a rise in buyer confidence. In any event if we, as consumers, rely on the statistics as our sole guide on what we should do, remember “figures certainly do lie!”
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