Housing markets poised for rebound

December 5, 2010 | Comments Off on Housing markets poised for rebound

By Venessa Wong of Bloomberg Businessweek

Back on the block: Housing markets poised for rebound (© Thinkstock/Getty Images)

Orlando, Fla., is the site of a 5,499-lot development by Starwood Land Ventures. // © Thinkstock/Getty Images

For builders, it has been a bad few years, as the housing market crumbled. Many builders had to stop work on projects when demand dried up, forcing them to scramble to keep even more losses off their books.

But now many of the nation’s biggest builders are beginning to spend money again by resurrecting some of their once-moribund projects, anticipating demand. So where are builders investing again?

To determine where builders expect to see new demand for housing, Businessweek.com searched articles and spoke with builders, including Pulte Group, KB Home and Toll Brothers, about where they are investing in new residential communities.

We identified projects in states such as North Carolina, Florida, California, Nevada and Colorado. The communities range from single-family developments to retirement communities with more than 700 units in Las Vegas and Groveland, Fla., by Shea Homes.

Lennar agreed to acquire or take purchase options on 2,700 of 5,499 residential lots across Florida that Starwood Land Ventures purchased at a bankruptcy auction.

Distressed lots are selling at a fraction of their original prices and present cheap buying opportunities for builders and investors.

David Stiff, chief economist at information-management company Fiserv, says land costs have dropped, but in general, “demand and supply conditions are horrible.” 

In October, new-home sales narrowly avoided August’s record low, and permits for future construction were down from October 2009, according to the Commerce Department. Stiff says this is because, in part, the economy is bad.

But demand is also being diverted to existing, foreclosed-upon homes, which in many markets are cheaper than new homes.

Builders are seeing more hesitancy among potential homebuyers, but Bob Jones, chairman of the National Association of Home Builders, said in a release, “Favorable homebuying conditions, including historically low mortgage rates and low house prices, should help spur additional demand as the job market gradually improves.”

Source: www.MSN.com


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