Slower Home Building Numbers Good News for Refinancing?

[Jan 21, 2010.]

 

Obviously one sector of the economy that has really taken a nose-dive is the housing market. Many homeowners find themselves in the position of owing more on their mortgage than their home is worth, perhaps even with an adjustable rate mortgage that is troublesome to refinance.

Beyond the impact on individuals, entire companies have seen their values plummet. Housing stocks such as Lennar and DR Horton have been hammered as investors rushed to short the housing market.

All throughout 2009, news stories like this one about slower homebuilding in California have peen popping weekly and monthly. The mood has been dire in as many ways as possible.

One positive sign, for borrowers looking to refinance a mortgage, is that homebuilders seem finally to have accepted that building more and more homes, without buyers to buy them, is counterproductive to everyone's interests. Yes, people lose jobs, but homebuilders are also forced to build creatively.

The main benefit as far as refinancing is concerned, when builders stop building so much, is that the integrity of the market is maintained. There should not 25 emtpy homes in your neighborhood, as Detroit and certain parts of California have been experiencing.

With less homes on the market, homes become more valuable, especially if the neighborhood is generally well cared for. That's the law of supply and demand.

And in this case, it could benefit hopeful homeowners quite considerably.

Homeowners seeking to refinance will definitely want to look at the matter from the buyer's perspective, because the refinance yes or no decision made by the bank certainly will be. That is to say, the bank will base their lending decision heavily upon the fact of what your home would sell for on the open market.

If your home doesn't hit those requirements, that refinance is going to be hard to close.

Be happy, then, when there are less homes being built, at least for the time being. If there is one part of America that seems alive and well, it's the dream of the young married couple to own their own home. This bodes positive for the long-term health of the housing market.

Looking to save your home from foreclosure by refinancing? Click here to find a lender that does that.

 

About Author:

Andrew Freiburghouse is a writer and businessman. He has worked as a magazine reporter, tax preparer, screenwriter, copywriter, and loan officer. He graduated from Santa Clara University in 1999 with a B.A. in English. Andrew was born and raised in the City of Los Angeles.