Sales of newly-constructed single family homes remain down and the head of the Bloomington-Normal Realtor's Association says regulatory issues are mostly to blame.
Ed Neaves, President of BNAR said, a decade ago, as much as 27 percent of the market was new construction. He says that segment has struggled since the great recession of 2008.
"The regulations, the federal banking issues, financing, cost of construction, new construction sales have (dwindled) down to about eight or nine percent of the market," Neaves said.
During October, 227 sales were closed. That compares to 212 in October last year. The average sales price however has dropped from $172,732 to $165,904. Overall, year to date sales are up 3.2 percent compared to a year ago.
That increase is modest, and Neaves said one segment of the market not very active right now are first time home buyers. Several years ago, there were state and federal programs in place to spur action among new buyers and sellers. Those ran out years ago, and Neaves said there are other factors keeping first time home buyers on the sidelines.
"When you combine the student loan debts with the banking regulations, and the tightness of money, it's like a perfect storm to make it just a little more difficult for first time home buyers to come into the market," Neaves said. He added another wrinkle--starter homes for millennials are what used to be second homes purchased years ago.
"They're waiting until they can get into a property with more bells and whistles," he said.
Neaves said inventory is down by about 100 from a year ago. Typically, fewer available homes means prices go up, but that's not the case, given the drop in the average selling price. The average selling price is down $6,828 from a year ago.
