Survey Shows Credit Woes Threaten Housing
Nearly two-thirds of single-family home builders are reporting
a severe lack of credit for housing production, threatening the fragile
housing recovery before it has time to take hold, according to a new builder
survey of acquisition, development and construction (AD&C) financing
conducted by the National Association of Home Builders (NAHB).
“Across the country, home builders and developers are reporting a deterioration
in credit availability and intensifying pressure on borrowers with outstanding
loans,” says NAHB chairperson Joe Robson, a home builder from Tulsa, Okla.
“Lenders are cutting off loans for viable new housing projects and producing
unnecessary foreclosures and losses on AD&C loans. With the pending
expiration of the $8,000 first-time home buyer tax credit, these challenges
threaten to halt any positive developments we have seen in the housing
market in recent months.”
In the latest NAHB survey of AD&C financing conditions,
63 percent of builders stated that the availability of credit for single-family
construction loans worsened in the second quarter of 2009.
Builders reporting deteriorating credit conditions cited the following
reasons: 80 percent said that lenders are lowering the allowable loan-to-value
ratio, 76 percent reported that lenders are not making new loans, 75 percent
stated that lenders are reducing the amount they are willing to lend and
62 percent said that lenders are requiring personal guarantees or collateral
not related to the project.
Two-thirds of respondents reported putting single-family construction
projects on hold until the financing climate gets better.
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