Volume 10, Issue 9 - November/December 2009

Industry Indices

Survey Shows Credit Woes Threaten Housing Recovery

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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