J Tillman's Blog

2013 Housing Market

John Basinger - Saturday, February 09, 2013

How many times can you hear the News “Entertainment People” on cable and national media outlets say the housing market is changing for the better before the people start adopting the same idea?

I think it is somewhere in the 200+ range. If they say it enough we’ll start believing right? I’m pretty sure the lobbying effort has started working. In the late 1980’s through the 1990’s and 2/3’s of the first decade of the 2000’s we were approached constantly inquiring if we would be interested in building homes for private individuals. Around 2009 everything came to an abrupt end and we shifted into remodeling and working commercial projects because all of a sudden the banks brought forward an enormous brick wall of no more lending. People looking to acquire a construction loan that would have qualified in the past 25 years with their present financial situation all of a sudden were denied the chance to build their dream home. In 2010 I had a branch president from one of the top three banks tell me that it didn’t matter who you were or how healthy your finances were, the construction loan applications that were sent to their corporate offices were rejected by a computer automatically because they just simply were not lending. Then he said,“The housing market is in a down turn, would you invest in a market that is steadily declining?”. It’s a simple idea, an investors ideology but without lending how could the economy and more importantly to us our industry rebound without banks lending money? Slowly but surely our shift to remodeling and commercial work it seems was the healthiest thing we could have done for our own interests.

While we stayed as busy as we wanted to from 2009 through 2012 the projects just were not what we were use to. Instead of building homes one after the other we started tearing out bathrooms and kitchens and updating them. Since our clients couldn’t get construction loans from banks they started digging into their own pockets. Pockets that were not deep enough to do anything but an upgrade here and an update there. Recognizing the economic situation we were glad to stay busy working.

Gradually toward about the middle of 2012 we started receiving more requests for work and the size of jobs started getting bigger along with the increased client requests. All of a sudden there seemed to be a shift in the peoples ability to consider better and better jobs.

In the beginning of 2013 we are starting to see people rejuvenating their interests for building homes. The jury is still out on the banks interest in lending but they have sure had quite a pass over the last few years with intrest free help from the Federal Reserve. Perhaps the banks are turning a page with their newely restocked coffers thanks to all of the citizens in the United States. I say this only because we have all been put in the position of doing more with less during the recessive times. With any luck we the people are smarter and just a little bit wiser about our economic situations. “If you don’t have it don’t spend it” this being the best practical outlook.

So if you don’t have the money to build a new house what do you do? There is only one avenue for people that don’t have cash for a new home and that is the lending institutions. We’ve watched the house values take a beating over the past 4 years and I am hopeful that this is the bottom of the devaluation scale. Moving forward now and investing in our future, building homes that will increase in value in a steady modest climb.

I received a tip from a branch president of one of the top 25 banks that they had so much money now they didn’t need our deposit enough to pay us over .03% on a jumbo deposit. “Wow” you can deposit twenty dollars or 500K and get the same interest. This tells me something good is about to happen. The banks are getting ready to lend!

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