The very low prices of properties offered at foreclosure home auctions have attracted a lot of buyers into the foreclosure segment, which results in eroding market share for new homes and, in turn, holds back homebuilding activities. In Michigan however, several areas are showing signs of strengthening new home markets.
Most realtors expect foreclosed homes in Southfield and distressed properties in other key areas of Michigan to continue to dominate home buying transactions in the coming months. However, they also claimed that interest in new houses have picked up, leading to improved homebuilding activities in various areas, particularly in West Michigan. Although housing starts are still behind last year's figures, realtors stated that this was just because 2010 was the year of the tax credit.
Despite the elevated levels of foreclosed homes for sale in Michigan, certain areas' new home markets, West Michigan especially, are showing signs of renewed life. During the first three months of 2011, Kent County housing starts totaled 133, down by 37% from the 2010 first quarter, but up by 71% compared with the same quarter of 2009. Analysts asserted that 2009 would be a better time for comparison since the tax credit initiative of the federal government was not yet in place during that time.
They argued that a lot of people took advantage of the tax credit and purchased houses last year, thereby providing a higher tally for new homes and improved activities even among foreclosure home auctions. Meanwhile, Muskegon and Ottawa also posted strong housing starts figures in the 2011 first quarter, reaching a total of 108 which represents a surge of 10% from one year ago and a massive 112% jump from two years ago.
In Kalamazoo County and its nearby areas, the impact of foreclosed home listings on homebuilding activities was still largely felt during the January-March 2011 quarter, with housing starts totaling 96. The figure was down 23% from the 2010 initial quarter and down also from the 2009 first quarter, albeit by only 6%. Nationwide, housing starts are also showing signs of improving, with March figures rising by 11% when compared with February. However, they remain lower than March 2010.
Analysts in Michigan still expect foreclosure home auctions to be the preferred destination of most homebuyers in the coming months, but they also expect new houses to get sold at a faster rate and homebuilding activities to improve even further. They claimed that a stabilizing economy and a growing job market are the reasons for the positive outlook.
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