So is our economy really recovering right now? Perhaps, but it’s not going nearly as fast as many would have hoped, according to some new real estate figures. Developers are the ones feeling the most heat as the numbers of sales drive some to the brink of bankruptcy.
There was a drop in home sales of almost 10% during January and February, according to one report we picked up on Monday. This drop is twice as big as what industry observers had been predicting.
While this might be good news for those looking to buy, it’s certainly anything but for the thousands of developers and private owners wanting a sale.
Take this example. Just ten minutes away from the Texas Medical Center in Houston there are 40 empty condominiums about to go under the hammer in just three weeks. Now why a property developer would be selling off so many units to the highest bidder in what is a prime location? Because prices are continuing to fall, and selling is getting more and more difficult.
Last month in the Houston area, which has up till now had one of the strongest real estate markets in the country, there were just 306 sales of condos, a 5.3% drop from last year.
Meanwhile, not so long ago a poll by Rasmussen showed that 31% of U.S. homeowners currently owe more on their mortgage repayments than what the value of their home is. Values are being dragged down by foreclosures across the United States, with almost 39% of new contracts in February being signed on what were distressed properties.
The problem is that for every month a new condominium stays on the market, not only does the price go down, the seller has to pay property taxes and association fees. This means that long-running sales programs incur quite a big cost, while the profits are steadily being eroded away.
For anyone looking to buy, times are good, but for the rest of us we just have to hope that things will turn around soon.