More Sales. Less Financing. Still Surviving

Well hello there! It’s been a long time. In fact, almost 2 years exactly since my last blog post. The past two years have been hectic to say the least and my work/life/school balance got a little unbalanced forcing the blog into the back seat. However, I am happy to announce that my last MBA class was completed last week and I’m back.

So where were we? In spring of 2009 the bubble had already burst and the real estate market was shaky to say the least. Fast forward to spring of 2011 (we will just forget that 2010 ever happened – it’s less painful that way). National Housing numbers are stronger - the US commerce department reported new single family home sales increased 11.1% this March and housing inventories fell to the second lowest level on record (http://www.nahb.com/news_details.aspx?newsID=12539). Personally we have seen sales, offers, bidding wars, and rentals increase across the board since the beginning of 2011. Developers are beginning to pursue funding for new projects, inventories everywhere are decreasing, and construction permits are again being applied for. These are all very good signs.

It’s not all rosy though. Mortgages for homeowners have gotten much harder to obtain as the standards necessary to qualify for a mortgage have tightened. Although, I support not giving out mortgages willy – nilly, many qualified buyers are having an extremely difficult time getting financing due to unsubstantiated income (read freelancers) or high down payment requirements. Buyers trying to buy condos in buildings that have “too much” commercial space face an even bigger challenge. New regulations have made mixed use buildings (those with hotels or high percentages of retail space in the base) in-eligible for FHA or Fannie Mae approval. Without these approvals loans cannot be sold on the secondary market making large financial institutions like Wells Fargo, Metlife, Bank of America etc. uninterested in lending. With less financing options the pool of buyers in the marketplace is significantly decreased which actually was the intent of the new financing standards. It makes my job tougher but it’s probably a good change considering that since the recession started in December of 2007 more than 2.3 million homes were repossessed by banks (http://www.cbsnews.com/stories/2010/08/26/business/main6807679.shtml).

So that’s where we are – more sales, less financing – still surviving.