As the economy continues to open following efforts to stem the spread of COVID-19, signs of recovery are taking shape, builders in Colorado are wondering how home building might change. The Construction Resource Group hosted a virtual panel to share insight on how the wider construction industry may be impacted going forward, including builders, real estate and lending.
[Related: Looking forward—Predicting changes in demand for new housing]
Real estate
Michael Beninati, owner and managing partner of Windermere Metro Denver Real Estate, said that when working with buyers on new construction homes, his team has been making appointments with builders to show homes.
“The nice thing about that is it does give the buyer a little more time with the onsite sales rep than they would have just walking the property,” he said.
Real estate agents are showing resale homes on a one-on-one basis with no overlapping showings, and only the people who are on the contract are allowed to see homes, Michael Beninati said.
He said there has been an increase of cancelations, noting that 10% of homes under contract with Windermere in the Denver metro area “are not closing with the first buyer for one reason or another.”
However, he’s also seeing an increase in sales activity, so the demand from home buyers is there. One reason for that is interest rates, he suggested. Interest rates are likely to remain low for the next couple of years “as we come out of this COVID experience and businesses slowly recover,” according to Renee Boulet, a loan consultant at New American Funding.
Lending
Boulet warned that current homeowners who have been hit financially and are tempted to enter forbearance should carefully consider how they will recover.
“There are consequences if you do enter forbearance,” she explained. Buyers in forbearance may not have their credit score lowered, but it will be reflected on their credit reports, which will affect their ability to qualify for a mortgage or refinancing, she said.
Buyers with low credit scores are “going to have a very difficult time refinancing” with most lenders, she said.
Danielle Andrus was previously the managing editor for Colorado Builder, and is currently Editor for the Journal of Financial Planning.
An interesting article although the 10% cancellation rate that is noted is not uncommon in any market, especially during challenging times. Please take into account that divorce, job change, credit issues, change of mind, death, and poor management of the account are all reasons for cancellations.
In recessionary or challenging times it is important to work with buyers daily ensuring that they are managed with concern and attention due to stress.
The more salespeople set expectations and manage the buyers, the less cancellations will occur.
ONwards and UPwards with proper counseling, management, and consideration to the consumer, builder, mortgage loan originator, title personnel, cooperating real estate broker and the selling real estate broker and/or the seller of the home!