Fewer Homes Being Built, Many Older Homes Being Bought

According to Shobhana Chandra of the Bloomberg News network, builders have begun construction work on fewer homes in recent months. Few houses are currently built, and it’s unlikely that construction will begin on new homes in the fall and winter months, meaning that the number of new homes built this year may be unusually low. This trend likely indicates that residential real estate ” is failing to contribute to U.S. growth two years into an economic recovery.”

Chandra reports that “Housing starts fell 1.5 percent to a 604,000 annual rate, in line with the median forecast of economists surveyed by Bloomberg News, from June’s 613,000 pace that was less than previously estimated, Commerce Department figures showed today in Washington. Building permits, a proxy for future construction, also dropped.”

She also notes that “Falling sales, foreclosures and a lack of jobs may keep delaying a rebound in homebuilding, depriving the world’s largest economy of a source of strength seen in the early stages of past recoveries. Concern over housing is prompting banks to maintain strict mortgage lending rules and was one reason the Federal Reserve said it would hold borrowing costs at a record low until at least mid-2013.”

These facts and figures, dismal though they may seem, are not entirely negative, though. Many real estate experts believe that, although new constructions will continue to stagnate, many potential home buyers have shown a renewed interest in older constructions. Many of these buyers have made plans to renovate and remodel these older homes, potential galvanizing increased real estate activity in their cities.

And, as long as the housing market remains somewhat depressed, interested home buyers will find that they’re able to score great deals on high-end homes.

If you’re interested in learning more about the current climate of the real estate market in Chicago, check out articles like this one on the CondoDomain blog!

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A Real Estate Blog by CondoDomain