Our friend Denise Lones sends the following under the title "The first signs are here!"No, (she writes) I’m not talking about spring. There is a completely different rebirth taking place—and I heard it with my own ears last week.
The sound I heard was the sound of money. Specifically, money flowing from banks. Ah, what a beautiful sound it is indeed.
Where did I hear it? From two builders.
As you may or may not know, in the course of my real estate travels I meet with a lot of Washington builders. I’m always asking them questions about the pulse of the market and how it relates to their businesses.
Last week, one of these builders said to me, “Denise, lenders are lining up to throw money at my clients.” Two had actually taken the time to call him with an offer to pay all closing costs on any property he can sell right now.
That made my ears perk up. Paying all closing costs is a generous offer in any market.
He explained to me further that the lenders are point blank telling him that they have money they need to lend—money from the American Recovery and Reinvestment Act of 2009. They also said that they need to disperse this money immediately to comply with Federal requirements.
Now that’s the best news I’ve heard in a long while! Lenders lining up to give away money fast. Did you think you’d hear that anytime soon? I sure didn’t.
They told my builder friend to get his advertising in gear and sell some homes. Needless to say, he was excited. He told me that for him, it actually feels like life is slowly returning to normal.
But wait, it gets better.
A second builder I know told me that a lender called him to offer 3% on any sold home—money that can be used toward anything from closing costs to down payments to interest rate buy-downs.
On a $500,000 home, that’s $15,000 free dollars! Amazing. This is really good news for buyers.
For first time buyers, it’s even better. The first-time home buyer who qualifies for the $8,000 tax credit available now has an opportunity to benefit to the tune of $23,000 from the purchase of a $500,000 home.
I’m so excited about this. I never thought I would see such terms in my lifetime. And I have a feeling it’s only going to get better and better as lenders scramble to compete with each other.
But wait. I’m not done with the good news yet.
Last week, I also attended a meeting for people who sit on the boards of local banks. It was unanimous among all attendees that any and all funds received from the Federal government as “stimulus money” need to go directly to the benefit of homebuyers.
Triple crown! Three pieces of good news for all of us in just a matter of hours. Mark my words, these are the first chugs of the locomotive steam engine of recovery.
Now, I know that the American Recovery and Reinvestment Act of 2009 is not perfect. Neither was the Emergency Economic Stabilization Act of 2008. Nor the Economic Stimulus Act of 2008. Personally, I would have liked to have seen a $15,000 tax credit instead of the $8,000 that was approved. Still, the initial results we’re seeing are hopeful for a more lucrative future.
If we could only get the excessive new construction inventory sold off, then we would see some fantastic gains. When builders stopped building, they focused exclusively on selling their existing inventory. This left a gaping hole in the resale market.
Once builders run out of inventory we will see a huge boost. The resale market will rebound because there will be no new home inventory left. Then, recovery will be in full swing.
Get out there and take this information to the streets. The first signs of recovery are here. I bet you’ll be the first to bring this good news to your clients.
Denise, I hope you're right! Thank you.
