Second in a four-part series
It’s a chicken or egg paradox: What came first? Strong new home sales or weak new home construction?
Robert Martelli, vice president of JKB Homes Inc., said the latest construction slump is the worst the Turlock-based builder has seen in more than 30 years in business. He believes new home construction has hit bottom.
“The market is stabilizing. We’ve seen the worst of it,” he said. “I think we’ll see it return in a couple of years.”
Jobs, real jobs, said Martelli, are a key to re-starting new home construction. Also hindering the industry is the flood of foreclosed homes on the market and high permit fees, typically $50,000 to $70,000, required to build a house.
“You can’t sell a house for how much it cost to build,” he said.
The slowdown in new home construction resulted in many developments closing, leaving behind a handful of completed, but unsold new houses. Those houses, typically after bankruptcies and foreclosures, have now resurfaced as opportunities for REALTORS and homebuyers.
Century 21 M&M and Associates REALTORS Scott Abell, Chris Amaral and Nanci Wyatt have been selling new home sales at the Thomas Terrace subdivision of Pacific Pride Communites in east Modesto since October.
“We had 10 homes and we’re down to five,” said Scott “It’s real strong as far as the buyers’ side. The demand has been very strong.”
Abell, a 20-year real estate veteran, said the homes range in price from $210,000 to $335,000. He said the demand is partially from buyers wanting a new home, not a foreclosed or REO house in less than brand new condition.
Chris Amaral agrees new homes are in demand. “If I had a 100, I could sell a 100,” he said. “Everybody wants to buy them. I’m running around with buyers everyday.”
Buying a new house over a resale house is a huge difference and the better condition is driving sales.
“It’s the difference between buying a new car and a used car,” said Nanci Wyatt. “I hear that over and over again, ‘I just want a brand new house.'”
While a few scattered new homes are still being built, Nanci Wyatt and Chris Amaral believe large-scale projects are still 18 to 24 months away. Scott Abell is more optimistic and said it could take off by the end of the year
“At some point there’s going to be an explosion,” he said. “All of the sudden builders will see they can make money and then they’ll start building.”
NEXT FRIDAY: Madera County’s new home market
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