Dagger in the Heart of the Remodeling Industry
I hate to have to write this: But I really think it's about time to contact the Federal Reserve and Ben Bernanke to tell him what's going on underneath the brouhaha about sub-prime lending.
It's awful enough that hundreds of thousands of homeowners are losing their homes and the greedy lenders are dropping into bankruptcy like flies.
Worse yet is the impact this debacle is having on homeowners who are securely ensconced in their homes, have a goodly amount of equity, and are able to pay their mortgages with ease.
These are the people who are my clientele. Not the wealthy, but the middle class homeowners who formed the bedrock of our economy...until now.
They have kept the economy going, ever since the horror of 9/11, by spending their money on making their nests as comfortable as possible. The trend spotters call it cocooning.
In the process they have funded the livelihoods of contractors, architects, designers, suppliers, like Home Depot and lumber yards, appliance manufacturers and stores, cabinet makers and dealers...on and on.
Most of this economic activity has been funded, not from savings, but from home equity loans.
Now, as a result of the sub-prime debacle, there are no funds available for home equity loans for anyone with the eensiest stain on their credit record...as much as 9 years and 364 days ago.
And even those with impeccable credit are finding loans to be less affordable and harder to come by at all.
And, now that the wealthy with their pocketed tax cuts are driving the economy, nobody is even noticing that the trillion dollar remodeling industry is grinding to a HALT!
If this doesn't scare you enough, have a look at Kathleen Pender's 7/31 column in the San Francisco Chronicle, Expect more woes with prime home-equity loans.
And, I suggest, if you are contemplating financing YOUR planned remodel with an equity loan; you may want to check into the availability of same before you spend any dollars.
Peggy
Posts
Peggy, these are my thoughts too. I've been thinking about this issue and talked to my husband about it, an issue I would not normally just "chat" about. I'll tell you, on Long Island, where I am, we are so oversaturated with kitchen showrooms, you wouldn't believe it. And, I'd say that the majority of these showrooms deal with the middle end client.
ReplyDeleteI think things are going to slow way down for the foreseeable future.
This just in.
ReplyDeleteAn update on Home Equity Loan availability.
Peggy
"Home-Equity Loans Tougher to Get"
USA Today (08/28/07) Block, Sandra
Lenders that sell home-equity lines of credit and home-equity loans to Wall Street are cutting back on such products because investors have stopped buying them due to the problems in the subprime mortgage market. Similar to jumbo mortgages, Fannie Mae and Freddie Mac do not buy home-equity lines of credit and home-equity loans; and lenders that do take a risk on the loans have already seen delinquencies for home-equity lines of credit increase 16.6 percent during the second quarter, according to the Federal Deposit Insurance Corp. Still, consumers will be able to find home-equity lines of credit and home-equity loans at some banks, saving and loans, and credit unions, which are more likely to finance the loans using customer deposits. However, borrowers should expect these products to come with higher credit standards, higher costs, and the requirement of a traditional home appraisal.