The Housing Market Bounce Back

As homebuilders’ confidence begins to increase, many builders are faithfully claiming that the housing market is back and hotter than ever.

In June, the National Association of Home Builder’s index rated 52, a seven-year high. A score of 50 simply means that more homebuilders believe the real estate market is positive than negative. Posting gains that have continually increased over the last year, more homeowners are expressing optimism amid today’s downturned economy.

This news receives a warm welcome, as most new home sales peak in the spring, only to see slow summer and winter months. Having high ratings for June is giving many homebuilders the necessary confidence to tackle short- and long-term building projects.

Only a year ago, a mere 15-percent of homebuilders were reporting that they felt positive about the real estate market. Today, that number has more than doubled. In fact, 41-percent of builders are feeling confident about the recession’s recovery. 

Steadily decreasing, foreclosures and short sales are becoming less frequent, which means that homebuyers aren’t being inundated with discount used homes. With a decreased inventory and supply, many buyers are looking to purchase new homes, which is setting a prime stage for homebuilders once again. With interest rates still hovering near all-time lows, buyers want to get in on the action while they can.

Since interest rates have crept up, many banks are reporting fewer refinances, which are often considered the “bread and butter” of the industry. This, in turn, is forcing many lenders to process new home loans.

Some areas of the country are seeing previously unseen sales tactics. O’Brien Homes has a development in Sunnyvale, California and due to high new home demands, they resorted to a lottery system that determines who may purchase one of their homes. Lotteries were held for each phase of the building process and during this time, home values started at $420,000 and are now at $815,000.

While lotteries do not offer an ideal solution for housing shortages, it was the only viable solution O’Brien Homes could offer buyers, even though disappointed prospective buyers were ultimately turned away.

Many homebuilders are getting back into real estate investments, but rigid lending requirements are still not builder-friendly. Fortunately, My Hard Money Lenders offer fast loan funding for bridge loans, construction loans, apartment building loans and commercial building loans.