The NAHB Chairman Joe Robson says that low market values due to high inventory is causing a crunch on available credit for developers. As inventories rise from foreclosed homes the market value of all homes in an area drops. It is simple supply and demand.
Appraisers have a duty to report actual values of homes at the time properties are evaluated. This allows lenders to set loan amounts and prevents the appraiser from being sued for misstating the value of the home.
It is an unfortunate reality that a home which was purchased a few years ago for $500,000 may only be worth $250,000 or less in some areas where 50 percent or more of the homes on the market are foreclosures. This is the case in the Southwest with Las Vegas having the highest percentage of homes approximately 60% of the home listings due to bank foreclosures.
Across the country in rural Southern Delaware local municipalities are coming under attack for the practice of paying developers to not build. At a cost of about 2 million dollars a year two Susex County developers are being paid enough to cover interest payments on land while permits are being held back. This is explained by the fact the developer already has permission to build on farm land outside of town which the council now sees as unneeded growth.
The National Home Building Association is asking for Federal loans from the Small Business Administration to cover the costs of losses to developers and cover loan payments to head off bankruptcies of small businesses. The 2010 program ended in September.