Housing market: New home construction a good thing?
JONESBORO, AR (KAIT) - The city of Jonesboro is handing out more building permits, according to statistics obtained by Region 8 News Tuesday. The Jonesboro Planning and Zoning Department told Region 8 News 28 home permits were issued in July, compared to 23 issued in June. In January, the city only had 9 people register for housing permits.
"We are seeing more people looking to buy houses and also have houses custom built for them," said Todd Wilcox, president of the Northeast Arkansas Homebuilder's Association.
According to published reports, economists have questioned the construction of new homes while many homes on the market are in foreclosure.
Region 8 News asked Wilcox about whether new home construction would force another downturn in the economy. He said banks and mortgage lenders have tightened rules for making loans.
"I don't see us going into another housing bubble. There are several factors of what's happening across the country and Jonesboro is so called a bubble. We got good industry. We got good education. We got good transportation," said Wilcox. "I don't think that's going to cause another housing bubble because there are so many people out there looking to buy a house and our inventory is lower than it has been in several years here in Jonesboro. A lot of the problems we had were with the manner of which banks were lending money. They might have been giving money to people that really didn't need it."
Wilcox said people purchasing homes currently are more qualified buyers who can afford the purchase, which is something the market needs.
"If we were to see hundreds and hundreds more houses added in our market, yes, that could kind of bottle neck things here in Jonesboro because there's a lot of people willing to buy a house but they got a house they need to sell first," said Wilcox.
"Getting out of the recession has been slightly a tough situation as the guideline changes in the mortgage industry have changed dramatically," said Andi Bandi, Vice President of Mortgage Lending at Focus Bank.
Bandi has been making home loans for 15 years. She said when the economy hit bottom; she could tell people were having a tougher time with finances.
"It really turned into a mess very quickly and it shouldn't have gotten to that point to begin with. People were giving loans that really shouldn't have been. It's a two sided situation. The borrowers, a lot of those just didn't know they shouldn't be getting houses and a lot of lenders just allowed that to happen," said Bandi.
Bandi said regulations for home buying have since changed. Credit scores now need to be higher to make larger purchases.
"The tough situation that we're running into is that they've raised the credit score guidelines where you used to could have low 600 credit score where now it's mid 700's or you're going to have a tough time getting a mortgage loan," said Bandi. "Where we used to could see a moderate credit score, now you have to have a great credit score and great people are having a hard time getting loans, even with great scores because of the guidelines."
Wilcox said the Jonesboro area has been in an economic advantage over the last few years.
"Across the country, there are 4 big markets that crashed hard, and everybody has kind of related that back to us and we have in the last year felt a slow down, but we haven't felt it like everywhere else has," said Wilcox.
When asked if the housing market could fall again, Bandi said as long as lenders make responsible decision, then the market should remain stabilized.
"A year ago, you could be self employed and as long as you got a great credit score, you could get a loan and now that's not the case. I mean now even with a great credit score, you have to have a great job, a two year history as far as your job goes and there are just a lot of new requirements and it's gotten a lot tougher," said Bandi.
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