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Local home construction plummets again

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Home-building permits filed in the Indianapolis area fell by more than 40 percent in February compared with the same month last year, mirroring a national trend of weak demand for new single-family houses.

In the nine-county metropolitan region, the number of building permits filed last month fell to 201, a decline of 43 percent from February 2010, according to the latest permit data from the Builders Association of Greater Indianapolis.

Home-building activity was flat or down in every county last month except Hancock, where just 11 building permits were filed. Only four were filed there in the same month last year.

Just 39 building permits were filed in Marion County, a decrease of 55 percent.

Home construction was strongest in Hamilton County, though the number of building permits fell by 52 percent, to 72.

In the first two months of the year, building permit activity in the area is down 38 percent from the same time in 2010.

Nationally, builders broke ground last month on the fewest homes in nearly two years, a reflection of declines in home prices and diminished demand that has made it difficult for them to compete.

The Commerce Department said Wednesday that home construction plunged to a seasonally adjusted 479,000 homes last month, down 22.5 percent from the previous month. It was lowest level since April 2009, and the second-lowest on records dating back more than a half-century.

The building pace is far below the 1.2 million units a year that economists consider to be healthy.

Millions of foreclosures have forced home prices down and more are expected this year. Tight credit has made mortgage loans tough to come by. And some potential buyers who could qualify for loans are hesitant to enter the market, worried that prices will fall further.
 

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  • Not good
    This is not a good thing, as it reflects a poor economy. How can lower prices be good for current homeowners?
  • Good
    I, for one, feel no sympathy for the builders. Irresponsible mass-tract building has harmed our region by promoting sprawl rather than reinvestment in our inner city. Perhaps if the housing supply remains limited, individuals might begin to move back into the inner-ring suburbs and downtown proper.
  • swing
    The pendulum always swings back the other way. What will demand look like and where will home-buyers choose to live? How much will they spend? Anybody's guess...
  • Shortage in coming years?
    I read an analsis by a well respected economist yesterday that stated that building developement is so slow in the region, particularly the lack of any planned new developments, that there will be a possibilty of a shortage of lots in 3-4 years in this region.

    Point was that builders are not developing any new communities, but rather snatching up vacant lots in established communtities and doing all buildling there. And since it taks at least 2 years to go from planning to building a new development, a shortage is on the horizon.

    Might be the only thing that helps the price of established homes.

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