Residential and Commercial Foreclosures Weigh Down Home building

by on Foreclosures

The continuous rise in the number of residential and commercial foreclosures in Wisconsin has dampened new residential property sales and, consequently, also held back home building in several areas. The U.S. Commerce Department reported the same trend nationally as sales of new houses declined by 16.9% in February to reach an adjusted rate of around 250,000 housing units. Economists stated that a healthy market builds an average of 700,000 new houses each year.

As the number of Milwaukee foreclosed homes for sale and distressed houses all over the state continue to rise, sales of new dwellings plummeted. Local builders have reported that it has been tough competing with a huge inventory of low-priced existing dwellings, so they have tuned to supplementary services, such as repair and remodeling work, to keep their operations afloat.

In the area of Fox Cities, the impact of foreclosures for sale in Wisconsin has been heavily felt. Builders in the area have revealed that, during the pre-crisis period, remodeling only accounts for 10% of home builders' work. Now, half of most home building firms' source of income comes from remodeling and repairing contracts. They stated that while the house construction market is in a downturn, all they can do is make sure that their business names are being put out there where potential clients can hear about it so that when the market improves, they will remember which firms have been most active.

Meanwhile, the impact of commercial foreclosures and residential distressed properties on the home building sector of Fox Cities can be seen in the latest data presented by the Valley Home Builders Association. According to the group's report, only 13 new homes were started in the region in February of this year; down from February 2010, when 39 units were built.

Last year, the association reported that 371 new homes were built in its service areas; down from the 2009 total of 413. Home builders have reported that a huge percentage of buyers in the region prefer to purchase homes in bank foreclosure listings over new houses. However, some realtors believe that the market is about to change and new homes will become more marketable in the coming months.

According to the Wisconsin Realtors Association, sales of existing dwellings in the whole state for January-February 2011 went up by 5% from the same period of 2010 to reach 5,215. Realtors believe that this portends good things for house construction, particularly since inventories of residential and commercial foreclosures are also declining. They believe that these developments will encourage further interest in new homes.