I am hearing reports of homebuilder lines of credit becoming more and more difficult to obtain. Certainly there have already been cutbacks in availability from the days of easy money, particularly when it comes to spec building. But up to this point builders could still get lines of credit for contract or pre-sold homes.
I now have reports that some banks are eliminating their builder lines of business altogether, and that includes credit for contract houses. Banks that maintain their lines will probably do so only for those builders who have been able to hang on to their liquidity and who have handled their business in a proper fashion.
So what does this mean for the Baton Rouge housing market? My take on the situation is that purchasers looking for a new home have existing inventory to choose from and a reduced pool of new construction possibilities, even on a contract basis. This is good news for builders and banks with developed inventory on the books and good news for builders with good credit.
It is not necessarily bad news for the consumers unless they wait too long. Purchasers who pull the trigger now have greater variety and low mortgage rates. Those who put off the buying decision may miss out.
(Brian Andrews is a certified mortgage banker specializing in the financing of commercial real estate. His business is Andrews Commercial Mortgage and he can be reached at brian.andrews@acmla.com.)
