Photo from Microsoft Office
With the number of home sales dropping, construction lending is also becoming a problem. You have developers and home builders stuck with houses that aren’t moving. And, they are sitting for sale with loans against them. The sub-prime mortgage market is such a small piece of the banking industry, but construction lending is a core product. If the real estate market continues to stay weak for much longer, construction-loan losses are going to be a big problem.
One of our large, local builders announced this week they are having difficulty paying their sub-contractors and their lender. They have hired a turn-around specialist but are not intending to file for bankruptcy. When purchasing new construction in today’s real estate market, you want to be careful of any early releases to a builder of earnest money funds or early release of monies designated for upgrades. Another problem you have to be careful of is not to waive your rights to an early issue of title insurance or other protection from construction liens. Consult an attorney if you have any questions regarding these issues.
I’ve prepared a chart showing the new construction statistics for the First Quarter of 2008 for the following areas: SW Portland (ML 148), Tigard (ML 151), and Lake Oswego (147) (Click this link to see the Q1-2008 New Construction stats).
Our Q2 statistics will be available in mid-July and I plan on reporting on that quarter for SW Portland, Tigard and Lake Oswego as well.
ALL ABOUT…..Portland.Oregon.Real Estate by Betty Jung is licensed under a Creative Commons Attribution 3.0 United States License.
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(For more local and national real estate information, go to www.bettyjung.com).
Betty Jung
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