10-12-2007, 09:44 AM
I'm seeing less requests for drafting and most of it is for smaller homes or renovations instead of new big houses. When they go to find quotes for construction work, they quickly get quotes back from multiple contractors. Before they had a hard time finding one quote, let alone getting it quickly.
All of the folks getting drafting done in the past year and a half - actually almost two years now have been intending on living in the house or renovation - no spec building at all. Many of them are building on "kitchen money" or bit by bit as they go along, not getting a construction loan at all.
I'm expecting house prices and construction costs to continue dropping until 2009 or maybe even later. Once these sorts of trends start, they continue going for awhile. It is sort of self-feeding, too, since a lot of the previous frenzy was fed by the rising valuation of houses. People had a $70K house, the values went up to over $150K (for the exact same house!) so they refinance get a big chunk of change and go buy a new truck, go to Vegas, put the kids through college, etc. They spend all the money, the value of the house continues to go up to $400K, they refinance the house and get an even better monthly payment by getting an adjustable rate this time since they plan to refinance before the rates go up. But, OOOPS! The house value doesn't keep going up, it is dropping! Meanwhile, the interest rate is now double, and they are doing everything possible to now make the monthly payments. They can't refinance because not only is the value of the house less than they owe, but since the implosion of the sub-primes, the financing requirements have tightened up.
Price of gas is going up, price of food is going up. Amount of foreclosures are going way up, too.
The last land tax sale wasn't very well attended and the lots didn't sell for over market price like they did at the tax sales at the height of the construction craze.
All of the folks getting drafting done in the past year and a half - actually almost two years now have been intending on living in the house or renovation - no spec building at all. Many of them are building on "kitchen money" or bit by bit as they go along, not getting a construction loan at all.
I'm expecting house prices and construction costs to continue dropping until 2009 or maybe even later. Once these sorts of trends start, they continue going for awhile. It is sort of self-feeding, too, since a lot of the previous frenzy was fed by the rising valuation of houses. People had a $70K house, the values went up to over $150K (for the exact same house!) so they refinance get a big chunk of change and go buy a new truck, go to Vegas, put the kids through college, etc. They spend all the money, the value of the house continues to go up to $400K, they refinance the house and get an even better monthly payment by getting an adjustable rate this time since they plan to refinance before the rates go up. But, OOOPS! The house value doesn't keep going up, it is dropping! Meanwhile, the interest rate is now double, and they are doing everything possible to now make the monthly payments. They can't refinance because not only is the value of the house less than they owe, but since the implosion of the sub-primes, the financing requirements have tightened up.
Price of gas is going up, price of food is going up. Amount of foreclosures are going way up, too.
The last land tax sale wasn't very well attended and the lots didn't sell for over market price like they did at the tax sales at the height of the construction craze.
Kurt Wilson