Apparently home builders are back in business. In another interesting article from Bloomberg, Prashant Gopal and John Gittelsohn report:
Builders are buying lots at less than half their original prices from lenders eager to move distressed construction loans off their books. Developments are being resuscitated from Florida, California, and Las Vegas to Utah and the suburbs of Washington, D.C., according to Brad Hunter, chief economist for Metrostudy, a Houston-based housing researcher.
"This is a natural progression of the cycle," Hunter said. "Projects fail, the price of the asset drops until it reaches a point where it's profitable for someone else to pick it up and remarket it. They reposition the project and then what was formerly infeasible, is feasible."
If these builders expect buying to ramp up and prices to come back soon, then they may be in for a rude awakening. Renewing these projects might be good news for construction jobs, but it's bad news for the housing market. If builders continue to add more inventory, then prices will ultimately fall even more as foreclosures continue in high numbers and buyer demand remains weak.
Read the full story at Bloomberg.
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