S. 1002, the Home Building Lending Improvement Act of 2013 will give more flexibility for banks with regards to construction loans. Specifically, the bill would discourage lenders from calling construction loans where payments are current and establish regulatory guidelines to allow the banking industry to restore lending for viable home building projects. This bill is unique in that it specifically addresses one of the main stressors of builders which is capital to start a building project. Also, the bill is unique in that it was drafted “bi-partisanly” by Sens. Robert Menendez (D-N.J.) and Johnny Isakson (R-Ga.). With the “gap” in the housing market of an estimated 2 million “non-started” households because of what some are now calling the Great Recession, there is a low supply of new home inventory and a high number of families looking for a home in which to live.
Because of economic constraints, studies show that instead of children growing up, going to college, and leaving the house to establish their own families and homes, college kids, instead, were unable to find employment and ended up moving back home. In some instances, there would be 2 to 3 generations of families living under one roof. The National Association of Home Builders (NAHB) has been working hand in hand with Congress to push through common sense legislation that will free up lending for the housing industry.
Statistics show that the construction of 100 homes will merit approximately 300 new full-time jobs and add $8.9 million in federal, state, and local tax revenue. Interest rates have been historically low throughout 2013 which has spurred the purchase and refinancing of thousands of loans across the country. The mortgage industry seems to have stabilized in their regulations, although getting qualified for a home loan can seem like an act of Congress to some new home buyers. However, the numbers don’t lie. The faster that builders can get back to work on new home construction, the more the economy will be stimulated by not only job growth and revenue but also by new homeowners spending money on all of the niceties that are purchased with the purchase of a new home.
It is no secret that new home buyers spend additional money on new furniture, accessories, fixtures, paint and hardware supplies, appliances, and much more after the purchase of their new home. A NAHB analysis shows that during the first two years after closing on the house a typical buyer of a new single-family detached home tends to spend on average $7,400 more than a similar home owner who does not move, including $4,900 in the first year after purchase.
Consumer Spending drives Wall Street because it is measured and evaluated each month. Wall Street drives interest rates, and the economy comes full circle. It may not be THIS simple, but loosening up lending requirements for builders is a good start to the cycle. Here at The Parks of Plaquemines, we have seen an increase of interest in new lots and new home building. Both home buyers and builders have been buying up our lots so much so that Phase I of our Villas Lots is sold out. We are currently finishing out development of Phase II. For More Information about buying a home in the Greater New Orleans area, Contact Us at 504-364-2350 or E-mail Info@TheParksLifestyle.com.