The Housing Market is Back!

As homebuilder confidence increases, the slight whispers are turning to crowd-pleasing cheers announcing that the housing market is back.

The National Association of Home Builder’s index rated 52 last month, making it the first time in more than seven years it has crossed the threshold of 50. In fact, a score of 50 means those homebuilders believe home sale conditions are better, rating higher rather than lower. Posting solid gains over the last year, this increase means that more homebuilders are optimistic about today’s real estate market.

This news is especially welcome in June, when many homebuilders typically report slower-than-average activity, as spring is peak new home buying season for many buyers. June reported higher levels of activity than May, which gives homebuilders even more hope for economic recovery.

A year ago, 15-percent of homebuilders reported that the market was good, while today more than 41-percent of builders feel confident in the housing market.

The market has seen a steady decrease in short sales and foreclosures, which has helped to aid the homebuilder markets. Both new and used home sales are increasing and even though interest rates are gradually rising, this has done little to detour buyers.

Some economists believe that since interest rates have increased, many banks have reported less than favorable number for refinances, which is causing many lenders to seek new loans. When lenders are more aggressive about financing new homes, this results in more new home loans.

In fact, in some areas of the country, new homes are in such high demand that builders are holding raffle ticket lotteries to determine who may purchase a home. In Sunnyvale, California, O’Brien Homes began using monthly lotteries for their 228-unit development. For each available unit, the company would draw a winner and then a backup. During each building phase a new lottery was held; however, homes also increased during this time – from $420,000 to $815,000.

While lotteries aren’t ideal situations because some potential homebuyers are ultimately turned away, it was the only solution O’Brien Homes could create that allowed a competitive market for homebuyers.

With more homebuilders getting back in the real estate game, lending regulations are still stringent. Many builders use hard money lenders that offer fast loan funding. Better Than Loans is a direct lender, meaning they offer bridge loans, which are extremely convenient for builders that may need to carryover costs from one investment to another. They also specialize in commercial building loans and apartment building loans.