Everyone knows that if you are looking to purchase a home, the time has never been better than right now. Tenacious builders that survived the housing market plunge are gearing up; they are building new homes and remodeling existing ones at a rate that we have not seen for many years.
According to the Bureau of Labor Statistics, there are currently 250,700 people working in residential remodeling, which is a 5.8% increase from levels one year ago.
This increase in construction jobs is directly related to the long-term problems in the housing market. Rather than purchase a new home, many Americans have chosen to stay and weather the storm in their existing homes. For many, “weathering the storm” includes repairing and improving their existing home.
In 2011, there were almost a million foreclosure related transactions, making up 23% of all residential real estate sales in 2011, according to a recent release by RealtyTrac. Investors and homebuyers continue to purchase foreclosure homes in some level of distress at bargain basement prices.
Several key factors play into successful investing in these types of properties, such as making sure the property is currently, or potentially, in a positive cash flow position. These distressed homes may require everything from a drastic “down to the studs rehabilitation” or the more cosmetic “home Botox treatments.” Both savvy investors and potential homebuyers active in this segment usually have a team of remodeling experts waiting in the wings who cannot only provide accurate bids for repair, but also complete the project in a minimum of time, thus avoiding unwarranted holding costs.
If obtaining an affordable home is on the top of your list, but fixing up an existing structure or purchasing a foreclosure related property is not, there are still options.
Prefabricated homes have been around for many years providing a viable alternative for affordable home ownership. This past week there were rumblings that IKEA, the Scandinavian home furnishing giant, in collaboration with an Oregon-based prefab company, Ideabox, was going to market a line of prefabricated homes in the U.S. While it is unclear whether the product release will actually include the U.S. market, it is intriguing to imagine a home being delivered to an awaiting empty lot, arriving with all of the cabinets, countertops, and flooring installed and semi-furnished…allen wrench anyone?
Diane Gozza is EVP of business development, Integrated Mortgage Solutions, Houston.