Tag: lending

Could there be a better time to buy?

1100 Junegrass

In my 37 years of selling and building new homes, the answer to the question is absolutely now is the best time to buy. 

Why?  Let’s look at the reasons:

            1.  Lowest interest rates in history.  Never have interest rates for homes ever been this low.  They may never be this low again in our life time.

            2.  Lot prices are the lowest in 5 years.  After an 18 year increase in lot and home prices, now the prices for lots have come down below the cost to produce the lot.  When the market returns to normal, the price of lots will be twice the current cost.  Also, there are no new developments for lots due to lender not loaning money for development.  When the lots we have now are gone, it will increase the price of home dramatically if there are any lots to purchase. 

            3.  Profit margins on new homes are the lowest in 20 years.  Due to lower demand for housing since the tax credit expired, builders are offering homes at the lowest profit margins in 20 years.  It is a buyers market so take advantage of it.

            4.  Energy features in new homes are the highest ever.  This makes the total payments to own your new home the lowest ever.  Adding green energy features to our homes have made it easy to guarantee heating and cooling cost.

I have never seen the new home market this great for the buyer.  My advice would be to take advantage of this time and purchase a new home.

-Ron Formby

What is up with getting a loan?

I’ve heard it quoted all over the internets that Housing is what brought us out of The Great Depression and other Recessions, but why is it that Housing is so sluggish?  Well, it’s not housing that’s sluggish, it’s lending.  The potential buyers that walk through my model home doors today are facing the strictest lending laws I’ve seen since I got into home sales.  I see several people a week who desperately want to buy a home and take advantage of all the benefits available to home owners, but they can’t get approved.  Why can’t they you ask?  Well, it’s not all “Bad Credit” as you might think.  I hear one of our salespeople every week mention someone with 780 credit score, who makes 90,000 a year who can’t get a loan on a $120,000 home.  WHAT?  Yes.  Commissioned Salespeople and Self-Employed with good credit are pretty stuck.  FHA guidelines were written with a very specific box in mind.  And when they were written the lending market was very wary of self employed and 100% commissioned folks.  All of those people with potentially variable incomes are some of the people with good credit who can’t get a loan these days.  What’s ironic about all of this is that with the economic weirdness that has been happening, a lot of smart people who find themselves out of a job decide that they have a lot to offer and go into business for themselves.  Entrepreneurship always increases in times of economic instability and that gives rise to the next strong economy.  Well, we might not have that very soon until lending laws loosen up a bit.

UPDATE 12/13/10

I said it weeks ago and the Wall Street Journal is chiming in!