Home Brokers and Builders Maintain Negative Perception of Market

by Donald Hanz on Foreclosure Crisis

Most home brokers share homebuilders' belief that the housing market in New Jersey will continue to be down in 2011. Confidence over a market recovery remained low among homebuilders during the month of December which mirrors the perception derived in November, according to the National Association of Home Builders/Wells Fargo Housing Market Index.

The negative outlook for the residential property market is based mainly on the huge supplies of foreclosed homes in Freehold and in other local areas of the state. The fact that short sales and foreclosures account for a bigger part of residential sales results in the lack of confidence among builders, analysts stated. They added that high unemployment rates and tighter credit standards are contributing to hammer the housing market down.

Along with high levels of foreclosures in New Jersey, local house builders are also reportedly concerned about the costs of land in the state which make New Jersey one of the priciest areas in the U.S. to conduct business in. The regulatory burden is also another factor cited by homebuilders that hinder the recovery of the home building market. Most builders are said to be optimistic that eventually, the market will improve, but not for a long time.

A number of home building offices have been closed in the state since the start of the housing market crisis and most operations have laid off employees, with majority of homebuilding offices focusing on re-evaluating their business models. Home brokers are also losing clients as buyers stay away from the New Jersey home market. Most of them believe that the industry will only get better once credit standards improve and the unemployment rate of the state declines.

Competing with cheaper bank foreclosure homes is bad enough for homebuilders, add the seasonal downturn and the cold weather that discourages home buying activities and one will have a very poor market indeed, analysts have stated. The homebuilding confidence index has maintained a score of 16 for the past two months, with anything below 50 considered a negative score, analysts explained.

Home builders and home brokers are expecting weakness in the house building industry to continue for another six months at the very least. They stated that New Jersey will have to wait for another year or so before the house building sector shows any sign of recovery.