Economy nearly stops new construction

October 17, 2008 11:43:34 PM PDT
The bad economy has brought construction of new homes to nearly a dead stop. Building fell 6.3 percent last month to the slowest pace in 17 years.

The nation is now on track to put up fewer homes this year than at any time since the end of WW II. Some brand new, never-lived-in-homes, are already in foreclosure.

"These houses would have sold two years ago at about $600,000. Now they're selling for $324,000 to $385,000. Brand new, never lived in," said Monica Chavez, a realtor.

Next weekend, 26 of these 3,000 square foot homes will be offered for sale at bargain basement prices because the builder went into foreclosure this year.

"You've been selling homes in this area for 19 years. Ever see anything like this?" asked ABC7's Leslie Brinkley.
"No. In the 90's maybe, but nothing like this," said Christine Chavez, a realtor.

In California, home sales are actually up 14 percent from a year ago, but the problem is nearly half of the recent sales are foreclosures.

"Those are distressed sales. Those aren't going to help the housing market pick up," said Chris Mayer, from Columbia University's Center for Real Estate.

According to the National Association of Homebuilders, construction started on just 936,000 new units nationwide this year -- the lowest since 1945. Builders are hit on both ends. It's harder to get loans to build and tougher to sell what they do build.

"You look and it's like when is it going to stop. It hasn't yet. Keeps going down," said Monica.

Still builders hold out hope like at the Wilder Development along Highway 24 in Orinda. 245 home sites are currently being graded builders are plowing ahead with plans to put in utilities and infrastructure next year despite the economy. They say pockets of Bay Area real estate are holding their own.

The National Association of Homebuilders is asking Congress to double the tax credit for first time buyers to encourage more home buying, but forecasts are for 2009 to be another tough year for construction.


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