The National Association of Home Builders (NAHB) has successfully lobbied Congress to introduce the "Residential Construction Lending Act." Three Democrats in the House (Brad Miller - NC, Carolyn Maloney - NY, and Joe Baca - CA) have sponsored this bill to provide a loan guarantee for builders with "viable" construction projects. These so-called AD & C funds - acquisition. development, and construction - for procuring the land, developing the infrastructure, and finishing the building lots to begin construction of new homes, including building spec homes - have been hard to non-existent to get in recent months.
Depending on what the definition of "viable" turns out to be, the funding is good to have - because it has been a real negative for builders in being able to get properties ready for consumers - it is a mixed blessing.
While this would have been very welcome news a couple of years ago when demand was still high from the construction peak and builders had properties on the drawing boards or in various stages of bringing them to market, today finds many builders with downsized work forces, a much softer demand, a weaker consumer confidence, and generally high unemployment.
Interest rates are great. The real question is how many builders can take advantage of this - should the legislation pass and become law - and what the effective demand for new homes actually is.
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