Home builders worry about finance and expiring tax credit
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PrintMore than 63 percent of single-family home builders state that the availability of credit for their projects have worsened in the second quarter of 2009. They add that the lack of credit may hamper any near term housing recovery.
According to a new survey of builder financing released last month by the National Association of Home Builders (NAHB), around two-thirds of home builders state that they are putting single-family home construction projects on hold until the credit and finance climates get better.
The Census Bureau reported 598,000 housing starts for August 2009. This figure is nearly 30 percent lower than the figure for August 2008.
Lenders and loans
NAHB Chairman Joe Robson, a home builder from Tulsa, Oklahoma said, “Lenders are cutting off loans for viable new housing projects and producing unnecessary foreclosures and losses on ... loans."
Robson also believes that with the pending expiration of the $8,000 first-time home buyer tax credit, coupled with tightening credit, may halt any recovery in the housing market in the near term. The tax credit is set to expire on November 30, 2009.
Home builders report tightening conditions
Home builders who reported tightening credit conditions in NAHB survey cited the following reasons:
- 80 percent say lenders are lowering the allowable loan-to-value ratio
- 76 percent say lenders are not making new loans
- 75 percent say lenders are reducing the amount they are willing to lend
- 62 percent say lenders are requiring personal guarantees or collateral not related to the project
“There can be no meaningful economic recovery until the flow of credit is restored to housing,” said Robson.
