The presence of low-priced distressed houses and pre foreclosure properties continue to hinder the growth of the home building sector in Indianapolis, Indiana, analysts have reported. Permits for home construction projects declined in the metro area in February 2011 compared with year-ago levels. According to housing industry analysts, the same thing is happening at the national level.
Local realtors reported that bargain-priced Indianapolis foreclosures for sale are taking a huge chunk out of new houses' market share. Moreover, demand for single family dwellings has been week in the past few months, causing home building activities to stutter. In February 2011, permits for house construction declined by 43% compared with February 2010. The total number of permits issued for the nine counties of the Indianapolis metro region was 201, according to data presented by the Builders Association of Greater Indianapolis.
The impact of Indiana foreclosures was felt in almost all markets of the state, analysts have revealed, with house construction activities remaining flat or declining in all counties of the region in February, except in Hancock. The county only had 11 home building permits issued in February, but the total represented an increase since only four were issued in the area in February of last year. In Marion County, a total of 39 permits were issued in February of this year; down by 55% from the same month of 2010.
In Hamilton County, home builders are relatively active during the month despite tough competition from distressed homes and pre foreclosure properties. The county had 72 permits filed during February, and although this total is higher than most local markets, it still represented a decrease of 52% from year-ago levels. Combining January and February figures will give Hamilton a decrease of 38% compared with the same two-month period of 2010.
According to housing industry analysts, the continuous rise in the number of foreclosures for sale, which had depressed housing prices, is largely responsible for the slowdown in home building activities not just in Indianapolis, but in the rest of the U.S. They also stated that tight lending procedures have made it more difficult for home builders to find buyers, while those who can afford to buy a new house are mostly waiting to see if prices will decline further.
Market observers are expecting further downturns in home building activities in various U.S. markets. They asserted that, as long as distressed houses and pre foreclosure properties are in high supply, new houses will not be able to gain traction, particularly with most homebuyers still not fully confident on where the economy is going.
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