Banks are looking for safety, no risk, etc. The days of easy credit are long gone now.

What do they want? Hard to say, because some will tell you 'sure, we are lending', but the requirements (presales, ltv, etc.) are so extreme that it just can't happen.

This is true for the individual borrower too - unless you have impeccable credit and a super job, no loan for you.


Until we see some lending on both sides, there will not be any progress for the built world.

So far, I have not seen any signs that credit is improving. I am actually seeing bad things, which will further decrease the likely hood of easing credit.



Jobs. That's what we need to see. Once that happens, everyone will breath a sigh of relief and the world will move again.

This is for the client who needs to have a custom house as they are disabled and do NOT want stairs. PERIOD. They cannot traverse stairs as they are in a wheelchair. Yes, they have a job and some money but no luck so far. If this is the norm, then we Architects are in big trouble because we'll have very little work.

jobs stimulated by real demand, not just 'there'. i completely agree with trace - there aren't many encouraging signs overall.

make - part of the difficulty answering is not knowing any specifics of your situation. is this a building on spec? commercial office, residential, hotel, or medical office? right now, for example, you couldn't get a loan to do new, speculative commercial office in atlanta unless you were putting up 80% of the cost as equity. we're that overbuilt. new homes on spec probably have a 50% cash minimum, sterling company balance sheet, and a demonstrated track record. you might get by with a little less equity if it's pre-sold and has 10% of the purchase price as a down. medical office is a little better; hotels aren't being done at any price.

overall, one huge problem is that the valuations/sales of too many existing buildings are still below what it costs to build new. heck, our landlord just picked up a 25 story tower on one of the prime corners in midtown atlanta for $80/sf. you seriously think he could build new for that? it's also 70% empty. so, there's a lot of companies who need to move in before it looks a whole lot more 'full', enough for the banks to pull the trigger on new work on another lot he owns 4 blocks up. only architectural work in there may be retrofits/upgrades to the building, as well as t.i. but those may be few and far between...

sorry make - didn't see your response post come up...

trace's analysis is right. they're not going to get a home loan unless they have an impeccable credit score (720 and above) and the end mortgage payment is no more than 25% or so of their current monthly income.

otherwise, the bank will simply say go buy something existing and retrofit that within your budget. blows, but that's what they'll say.

Outed,

So that's the metric?

That's what I was looking for...

Thanks!!!1

it's one bank's metric. it's also just the income equation. they're also going to want to know that the appraisal of the finished home doesn't exceed the neighborhood average by more than 10-15%. right now, that may be the hardest thing to bridge - if you've had a number of foreclosures or short sales (or worse, pending short sales), then it could really skew the relationship between what current asking prices and what you can build for.

so, say you're in a neighborhood of homes selling for 250K and the average size is 2000sf. the bank is going to want to see your final cost be no more than $135-140sf or so, including the land. that's do a (now) conventional loan at 10% down. if it costs more than that, they'll expect you to pay the difference, on top of the 10% down. so, if you're building 2000sf at 160/sf, you'll be expected to have roughly 75k showing up at the closing (50k is the diff. between your const. costs and the current selling price and 25k is the normal 10% down you'd need). ironically, if everything else worked out, it would be easier for the buyer in this case to get a 400k home on resale, save 35k in cash to invest in apple, and have a potentially nicer home or a better neighborhood to show for their efforts.

the numbers are almost impossible for anyone in the middle class to do, so builders are trapped, owners are trapped, and the overall appetite for risk is low. just an awful environment unless one of three things happen: the banks finally get comfortable the world won't cave in tomorrow (3-5 years before this happens); jobs return, being driven by real economic demand (won't happen in the us or europe before 2012 or beyond); or people who have stacks of cash get back in the game and are build some projects that really sell.

Banks are looking for safety, no risk, etc. The days of easy credit are long gone now.

What do they want? Hard to say, because some will tell you 'sure, we are lending', but the requirements (presales, ltv, etc.) are so extreme that it just can't happen.

This is true for the individual borrower too - unless you have impeccable credit and a super job, no loan for you.


Until we see some lending on both sides, there will not be any progress for the built world.

So far, I have not seen any signs that credit is improving. I am actually seeing bad things, which will further decrease the likely hood of easing credit.



Jobs. That's what we need to see. Once that happens, everyone will breath a sigh of relief and the world will move again.

Oops

"if you've had a number of foreclosures or short sales (or worse, pending short sales), then it could really skew the relationship between what current asking prices and what you can build for."

Actually, all the wealthy people in my neck of the woods are all purposely defaulting on the loans in collective swarms to drive down the price of their homes to insanely low amounts.

They then buy their neighbor's home and move back in at half the price.

hmm... ug - going to have to see real data on that claim otherwise it sounds too much like an urban myth. there aren't any banks right now that would loan money to someone who's just defaulted, even if they are 'rich'. the only way your scenario would work is if they are walking away from their current loan and paying cash for that neighbors house.