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Increase in foreclosures can be good news for home buyers

Foreclosures and short sales have definitely increased over the last several years, and it has hammered the home construction industry. Residents of South Carolina should know that even though interest rates have recently dipped below 4 percent for a 30-year fixed-rate mortgage, new home buying and home building remain down.

The housing boom of the first half of the last decade made credit cheap for home builders and buyers. But when the overinflated market crashed in 2008, it forced many home builders into bankruptcy and many homeowners into foreclosure. Foreclosures in October in the state were up 15 percent from October 2010.

Home construction is a large industry, but it seems to be caught in a downward spiral. The more foreclosures there are, the cheaper real estate becomes, and the less demand there is for new construction projects. Stiffer lending standards by banks have also impacted the industry. Many home builders cannot get the loans they need to begin new construction.

This situation has produced the cumulative effect of stagnant job growth in the home construction industry, but bad news for some can be good news for others. Real estate in many areas of the country has become increasingly affordable because of the increase in foreclosures and the willingness of banks to accept less money than is owed on homes.

This is an opportune time for South Carolina residents who are interested in buying real estate. However, it is vital to prepare properly before making this kind of investment. Prospective buyers should consult with a real estate attorney who is well seasoned in real estate law and can help those interested in buying a home formulate the right plan.

Source: The State, "Home builders dogged by tougher lenders, foreclosures," Kristy Eppley Rupon, Nov. 10, 2011

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