Home Builders Competing with Foreclosures

1 July 2008

Author: admin Posted under Foreclosure homes

It seems that the problem in the mortgage industry has claimed another victim. This time around, it is the home builders. It is not enough that they are trying to sell these newly-built homes in a sluggish market but to makes matter worse; they are now competing with foreclosure properties – some of which were their own creation.

Home Builders Competing with Foreclosures

Already crippled by the dramatic decline in national home prices, these home builders are offering more incentives in order to tweak buyer interest. Sadly for them, foreclosure properties are generating more buyer interest lately, primarily due to the below-market prices. Many home builders are not giving up. The aggressive ones are offering financial specials and freebies and cutting their asking prices.

Buyers, on the other hand, can not be blamed for being interested in these homes. The huge discount off the present market value is just one of the main attractions. Some are genuinely pleased because of the large inventory of foreclosure homes for sale to choose from. Even though these buyers will be buying abandoned, neglected and dilapidated homes, they could certainly not get over the considerable savings and instant equity they will be enjoying. After all, they will still have money left even with the renovation and repair expenses.

Also, foreclosure properties located in affluent neighborhoods have also become available and many buyers can not resist grabbing these properties.

Home builders are certainly feeling the crunch. Some have decided to postpone construction until the market has corrected itself. While there are others, who out of sheer desperation, are offering these newly-built homes at an amount that is below cost of construction.

Such unfortunate situation is prevalent in states like California, Nevada and Florida. These states were once the epicenter of the housing boom. Understandably, the same states have also become the epicenter of the foreclosure crisis when the subprime mortgage industry collapsed.