New Home Construction is Down - And That's a Good Thing...

March saw another decrease in new home construction as builders have started 72% fewer homes than in March of 2008. Only 22 permits to build single-family residences were taken as compared to 78 permits in the same month last year. Since January only 59 homes have been started, compared to 198 homes started in the first quarter of 2008. While this unfortunately means unemployment amongst the building trades, there is some good news with this.

Like all products for sale, homes are subject to the law of supply and demand. As demand increases, supply dwindles; when demand decreases, supplies become too great. During the "boom" years builders were throwing new houses together as fast as they could and there were lotteries held for buyers to get into the new subdivisions. Prices went up and up and up because builders could barely keep up with buyer demand. The market finally (thankfully) started to level out but, because the building process starts long before a foundation is ever laid, builders were still going like gangbusters. This resulted in a HUGE inventory of new homes when demand was in a slump.

Without buyers chomping at the bit, builders had to start scaling their prices back to reasonable levels to entice sales. This then made sellers of pre-owned homes have to scale their prices back to compete with new construction. We ended up with nearly two years worth of new and pre-owned inventory! Stores put clothes on sale to clear the racks for next season's fashions - and that's what home sellers had to do as well. Homes were put on "clearance" which, together with the new tax credits, enticed people to buy houses again. Inventory has gradually been decreasing toward reasonable levels and prices in many areas of the county have leveled off. Price and building stabilization was desperately needed; and we're still seeing that transition. The only way to get that is for homes to sell and for builders to scale back.

If you or someone you know would like to take advantage of the current buyer's market and tax incentives, give us a call at 360-609-6775. Or visit the "Contact Us" page at www.MyRealtorIsJamie.com. We are here to help!