Home prices on the rise? John Paulson, a hedge fund manager who made billions predicting the crash of the real estate market back in 2007 is now out saying that home prices will rebound this year 3-5% and EIGHT TO TWELVE percent next year!
What!? I am not sure exactly where he may be coming from and I can't help but consider the sharp decline in construction over the last 2 years and the increase in buyers thanks to the late $8000 tax credit which has helped eliminate some inventory.
I would guess that the slowdown in construction will continue into next year as money is still pretty tough to get a handle on for spec financing or construction through the local and national banks here in our marketplaces. I don't see that getting any better. After all, construction lines of credit are very risky for the banks who offer them...and some consider them to be in the "extreme" risk category still. Lower inventory=higher prices if the number of buyers holds steady.
NEW Construction Insight: I would see seven to ten new construction loan prospects a month from about January until August in years past. Of those, I would be able to find construction financing that fit their needs (often with no out of pocket money when we opened the construction line of credit and no monthly payment until construction completion) for about 80% of them that ended up proceeding in a year like 2006.
Of about 20 of those I am thinking of from back then, I would have only been able to do about 8 of those loans. SO: not only has interest in construction lending dropped off due to the perception that it is impossible to get, but those interested are MUCH less likely to meet the qualifications to get construction financing if they wanted to.
The best bet: Find a builder like Sunrise Homes, Jodi Leone's group, Shane Collins, Meyer Garrity, Rosa Johnson or another local one to you who actually carries the construction loan for you. We offer extended rate locks on your permanent financing and can come in with a permanent loan readily when the construction is done.
The opportunity is this: there are enough people needing to get a handle on some work that producing a home is much less expensive than before. Laborers who were charging 30 bucks an hour are charging half that. Lots that were $100,000 or more are now available for $75,000 and people ready to get in on the real estate market are SOLID to begin with, so buyers are MUCH more likely to STAY approved from application to construction completion.
Cheers!
--
Chad Schauers
Montana Mortgage Lender, Bozeman, Montana
Personal Cell: 406 799 8613
Personal Email: metchad@gmail.com
