I recently saw a link to a Realty Times article that quoted Fed Chief Ben Bernanke as saying to the Economic Club of New York that in his view, “Housing in the coming year is going to be a relative bright spot – a helpful driver of national economic growth, rather than the wet blanket it’s been for the past couple of years.” That didn’t get a lot of play in the general press, so I wanted to help get the word out. Here’s a link to the article.
It reminded me that my wife had lunch with her sister in Charlotte over the Thanksgiving Holiday, and part of their conversation was about Susan’s brother-in-law saying that he plans to start construction in a development in the Belmont/Mount Holly area. Guy is a builder who has previously operated two companies. One a high-end residential construction company in the Charlotte area building custom luxury homes and some inventory in that range. He also has another company that builds homes in some volume in small developments. Obviously the economy has not been kind to his businesses, although he has maintained the lower priced home business with some success.
I talked to him yesterday about our economic outlook and why he felt it is the right time to launch some new construction. I mentioned the Realty Times article, and he agreed that after over a year of being in the doldrums, he feels that there is pent-up demand that needs to be addressed as we see the first glimmers of positive news coming from the various reporting agencies. Inventories of lower priced homes are coming down in our area nearing what we normally think of as a balanced market. Yet, people don’t want to commit to a builder for building a new home without having at least a sales contract on their current home since sales are still somewhat slow and unsure as to how long it will take to re-sell a home. Therefore, the builders must have some inventory to sell right now. Guy also builds a home that is several cuts above the average high volume builder’s quality, even in this price range. He understands that people need to see the actual product in order to be comfortable in selecting that product. The trick in all of this is that the banks are still not keen on lending to builders for investing in inventory homes. Therefore, Guy is going to be seeking private financing for this venture. I think he’s on target. From what I’ve heard, there is lots of investment cash on the sidelines looking for a good opportunity. This just may be the ticket.
It’s nice to see a smart builder I know have enough confidence in the future to see the coming months as an opportunity to get out ahead of the crowd.
