Home builders hit by the real estate downturn are turning to banks and lenders for work. The arrangement allows builders to pick up previously abandoned projects and finish them for a modest return. For banks who own a bevy of unfinished housing developments and foreclosed homes, it means they will be able to sell the lots for more than if they had left them uncompleted.
The trend is particularly strong in hard hit areas like California, Las Vegas, and Arizona where housing projects grew rampantly until the bubble burst leaving many developers and builders either belly up or barely surviving.
The collaboration between builders and lenders allows builders to stay afloat. The construction industry as a whole as suffered greatly from the economic meltdown. While, normal measure of cutting staff and number of projects has traditionally helped builders in lean times, the sheer lack of movement means more builders are going out of business.
Builders working for banks is unusual, but not unheard of. Sometimes, builders are even working for the very bank that will not lend them money. It’s a fine line to walk, however, it creates business for both banks and builders.
According to Stephen Melman, the director of economic services for the National Association of Home Builders, many builders are now contracting work to lenders. It keeps the usually fraught relations between the two in working order, all the while promoting job growth and movement of money into the economy.
The worst in the real estate market looks to be over. Although foreclosures are continuing to occur on a daily basis, there have been talks by the Obama administration to actually put a temporary moratorium on foreclosures in hopes of helping homeowners from losing their houses.
The controversial proposal comes on the heels of new legislation to help homeowners refinance or modify their loans. Big banks have been put in charge, however, many are failing to follow through on promises.
New data indicates foreclosures should lessen and the residential real estate market will recover by 2011.
Written by Lani Shadduck
HULIQ.com
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