The Unique Advantage of High Performance Homes
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One of the biggest challenges builders face is the inventory of existing homes for sale. The financial crisis has raised this issue to a critical point because much of this inventory consists of foreclosed homes that the lenders are selling at a deep discount. Realtytrac expects 1.2 million homes will be repossessed in 2011, which is 20% more than in 2010 and would signal the peak of this current foreclosure crisis. These foreclosed homes on the market are known as the “visible” inventory. Unfortunately, the housing market will not bounce back until most of these units have been sold, as consumers are hesitant to buy if they think prices will continue to drop. Another threat is the “shadow” inventory, which are homes lenders have foreclosed on, or will soon, but are withholding from the market because they don’t want to further depress prices. Corelogic estimates that as of August 2010 the shadow inventory consisted of 2,100,000 housing units! The other component of existing inventory, speculative new home construction, is at historic lows. As of last November there were approximately 197,000 new homes for sale nationwide, the lowest since March 1968. Therefore, a new home builder is much more likely to be competing against an existing home than a new home.
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