There's no question in this contest buyer's win. Buyers snap foreclosed properties left and right. That's just the reality here on the ground on foreclosed properties: if they're decent, clean, and well priced it would sell first over their competition, that is the other type of sellers (builders, resale).
Foreclosure sales gives headache to builder's already low home sales, via WSJ.
Or consider Pulte Homes Inc.'s predicament in Henderson, Nev., near Las Vegas. The builder is trying to sell a new, four-bedroom house for $214,990, while a home owner is trying to dump a similar house, which Pulte built two years ago, for $149,999. That price is less than the owner's mortgage under a "short sale" approved by the lender.
In many markets, "we are no longer competing with other builders. We are competing with foreclosures," said Steve Ruffner, president of the Southern California division of KB Home.
Sales of used homes are actually rising in some regions because of foreclosures, but new-home sales fell to a four-decade low in January, down 77% from their peak in summer 2005. Altogether, home builders sold houses at a seasonally adjusted annual rate of 309,000 units in January, down from a peak of 1.4 million in July 2005.
Builders competing with foreclosures in many market, including Washington DC region. Over in metro DC region, i.e. Prince William county, we already see the impact. Builders lowering their prices from the peak. You can now find new single family homes in Prince William county for under $400k.. or maybe even lower. A drop of 25% from the peak. Pre-that, you could hardly find single home in the $400's.
So, the better conditioned foreclosed houses sell in no time with multiple contracts on the table, in which only the 'best and highest' offer will be selected from the pile. And those foreclosed properties that are still on the market are 'junk' for lack of a better word remain for sale until it could find the 'right' buyer..
image: CRA- George Mason University
