Recession And New Construction

Recession And New Construction
05-28-08

There are many areas of the real estate market that are affected when a recession comes into play. But with that being said, some sides of the market get the bad end of the stick whereas others narrowly escape too much damage. If you are interested in new construction, you should know exactly how a recession can affect this market. This not only holds true for those who are interested in buying a new construction home, but also for those who are selling them.

So what does a recession and new construction have to do with one another? Generally speaking, during a recession, homes that are being built from the ground up are going to have a hard time selling. The fact of the matter is that a recession can slow down the industry, and for construction companies to sell new homes, they are going to have to offer some incentives.

The nice thing about being a buyer in the market for new construction during a recession is that you may be able to save a lot of money. For instance, new home construction companies may offer tens of thousands of dollars worth of free upgrades if you decide to buy during a recession. Why would they do this, you may ask? Simply put, they are not going to make any money with the home sitting on the market. So in order to attract a large number of buyers, these companies will offer free upgrades. This allows buyers to get a home in their price range that is worth much more than the final asking price.

Remember, new home construction companies build properties in bunches. This means that a recession could hit, and in turn leave them with 20 or more homes and no buyers. As mentioned above, offering incentives such as add-ons and lower prices is the only way to make sales. No, the company will not make as much money on these sales, but each day that a home sits dormant is money that they are losing.

As you can see, a real estate recession can have a negative impact on the new construction of homes. If you are in the market for a home during a recession, see what type of deal you can get on new construction. You may be surprised at all the extras as well as the low price tag.

Mark E. Moebius
Miljonair Homes
Custom home builder St. Louis
3451 St. Albans Rd.
St. Albans, MO 63073
636.300.9000