A buyers are seeking good-looking homes and ignoring dilapidated foreclosures
Maybe Americans aren't avoiding buying homes right now -- maybe they're just avoiding buying ugly homes. The housing market may be splitting into two sub-sectors: well-kept, good-looking homes and run-down, torn-up homes. Could the latter group be preventing the housing market from stabilizing?
The separation of these two types of homes is mentioned in a blog post e-mailed to me on Tuesday by Jeff Lichtenstein, a North Palm Beach County, Florida realtor affiliated with the luxury-property network Christie's. He writes that demand is quite strong for nice properties; it's the ugly stuff that nobody wants. From his blog post:
The Case-Shiller Report states that there is a ton of foreclosures and short sales coming and thus see a 10-20% drop in prices. Case-Shiller is correct on the never-ending short sales and foreclosures coming. However, what Case-Shiller fails to state is that there is a huge differentiation between 'good inventory' & 'bad inventory'. When a buyer gives me their wish list, it usually goes something like this.... I want open & airy, master on the first floor, updated, nice view. The shorts sales and foreclosures tend to be dark and dreary, closed-off floorplans, dated, unpampered, and ugly views. Therefore there is an excess of 'ugly homes' but not a lot of 'good looking' homes.
One of the reasons why there are so few nice homes out there is because construction levels have been so low. Picky buyers have limited options when considering existing inventory alone.