New residential home construction dropped despite the extension of the first-time homebuyer tax credit. This came as a surprise to many as the housing market as a whole seemed to be on the rebound, so what is the problem?
Many feel the amount of foreclosures in the past year coupled with the new tax credit for first-time homebuyers has caused new residential home construction to fall. With so many homes available and at low rates with a tax credit to go along with them many are seeking to move quickly to take advantage of the tax credit extension and, rather than wait for residential home construction, are moving into homes that are sitting empty and waiting.
Does this tax credit signal the end of residential home construction or are the numbers of the last few weeks simply a combination various factors working against new residential home construction? Perhaps new home construction is being put on hold for the holidays or maybe first-time buyers are looking to spend less for a home that’s already built instead of a more costly new home.
The caution over the slow recovery of the economy has also caused many to turn to homes already build rather than invest in new residential home construction, which can run into difficulties, takes time, and can come with unexpected costs. Many see buying a home that’s already built is a more secure bet and with many homebuyers being cautions they feel new residential home construction is too much a risk.
However, don’t count new residential home construction out. When the New Year starts or unemployment decreases, when people feel more confident in the economy, more secure in their jobs and the value of their dollar they will begin to build again. As we get closer to the summer of 2012 many residents of Alabama are looking to either buy or sell a home. The summer months are the hot months for the housing market and it will be interesting to see what 2012 brings.