A few comments, suggestions and ideas…
I will be attending the Pacific Coast Building Conference (PCBC 11) next week in San Francisco. This event has seen a significant downturn in both exhibitors and attendance since the downturn in 2008 but is still considered the most important event for the residential and light commercial construction sector in the West Coast of the United States.
I will be meeting with a number of residential builders, architects and distributors while at PCBC and will report on the both the quality of the event and any leads generated from my meetings in the next Wood Connections newsletter. If any member is attending and wants to join me in these meetings or would like me to meet with their customers please contact me at email@example.com.
I had a recent conversation with a BC prebuilt housing manufacturer, who has been active in selling homes in the US market for over three decades. He has a new competitor in the market and it’s not who you would expect. Due to the continued credit crunch and volatility on housing prices across the United States, banks are unwilling to lend money to even well qualified clients looking to build a new home. This situation is worse, if the house is prebuilt, and is manufactured in Canada.
The volatility in residential housing in certain regions of the US has banks lending money based on the value of the property at the time of purchase and not on the current assessed value. So if the client has property that was purchased years in the 1970s or 1980s when prices were low, their ability to secure a construction loan is severely curtailed.
The options are to self-finance the construction, or to turn to hard money lenders at a higher interest rate and build the house to lock-up, where the banks risk is diminished to a point they are willing to take over the mortgage. It has even gone to the point, according to the manufacturer, where the bank will push the client to buy a (bank owned ) house in for-closure, rather than purchase a prebuilt home from Canada. So rather than simply being a lender, the bank has now become a competitor as it tries to unload the massive inventory of houses in for-closure throughout the US.
It will be interesting to follow this issue to see if it’s a blip in the market, or if US banks will continue to provide roadblocks to Canadian prebuilt housing manufacturers selling into the United States.
If you have any questions or want any further information on the US market please feel free to contact me at firstname.lastname@example.org or on my cell at 604 728 8786 .