October 19th, 2010
01:06 PM ET

Contractor: We could build homes if banks 'loosen up'

Contractor Paul Kinney, owner of Race Point Inc., on the site of a $3.5 million new home, says the Building Permit/Housing Starts report is misleading. Banks are not funding the permits. Most projects, like the one he's building now, are funded by foreign money.

The U.S Census Bureau and Department of Housing and Urban Development released its monthly report on housing permits and new construction and it shows the upward trend in this economic indicator continues.

The report shows single-family home building permits in September were 405,000 up 0.5 percent above over August. Single-family housing starts in September were 452,000; this is 4.4 percent over.

CNN's Jim Roope reports however that the contractors who turn building permits into buildings say these numbers are not necessarily reality because banks are still hesitant to fund permitted projects. Contractors say new homes may be getting the green light by cities, but not the greenbacks by the banks to start construction or in some cases complete construction.

Paul Kinney, owner of Race Point Incorporated, a top 500 builder of new homes, says he can get 30 permits by the middle of next week, but the banks aren’t lending money so the report is misleading.

“Remember a couple of weeks ago when they came out and said guess what the recession was over? That rumble you heard was the construction industry laughing their ‘friggin’ brains out,” said Kinney.

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Filed under: Economy • Jobs
soundoff (127 Responses)
  1. Employed

    The banks are just greedy. Why is it I can pay 7% interest on a home loan, but the same bank that holds the note won't let me refinance to the current rate of 4.35% because my loan is under water? It's the same bank!!! I'm not asking to borrow more money. I just want to refinance at the current rate.

    October 19, 2010 at 4:45 pm | Report abuse |
    • Seymour

      If rates had risen to 10% would have called the bank and offered to pay more?

      October 19, 2010 at 5:03 pm | Report abuse |
  2. wanda j. brown

    I am truly not surprised by the way the Banks and Wall street have literally "spit in the faces" of the middle class. Both
    Bush and Obama have made the identical same mistake in trusting the "fat cats" to care about the middle class. They
    won't be satisfied until the country has a two class system, upper & lower class only! These two presidents did NOT
    punish anyone for this mess. They both handed over billions without a single string attached. And wall street laughed
    all the way to the bank. Nobody went to jail! Even the CEO of Countrywide only got a slap on the wrist. So it is entirely
    possible that this can and will happen again no matter who you put in office. The repubs are behind wall street 100%
    but yet these simple minded teabaggers believe they will get a piece of the pie one day. There is no longer an American
    dream and you can thank the greed of the Wall street "fat cats" and their overpaid bonus structure that continues to keep the middle class in a strangle hold. Until somebody GOES TO JAIL the fat cats will continue to destroy America.

    October 19, 2010 at 4:59 pm | Report abuse |
  3. Dennis

    Well then lower the cost to of housing and still have a profit instead if being greedy Let every one be able to buy.

    October 19, 2010 at 5:06 pm | Report abuse |
    • Common Sense Solution

      Exactly! If everybody from the top down took a haircut, the homes could sell. After all, wages are stagnant and any reports that claim otherwise are plain wrong.

      October 20, 2010 at 6:43 pm | Report abuse |
  4. SJ

    Bankers are becoming the most regulated industry around and after the housing bubble burst, the bankers were blamed for the majority of what happened. When examiners are inside a bank and rating that bank and the results of their exam based how many risky construction/development loans they have on their books-it only stands to reason that banks are going to be hesitant/slow to lend.....they are being told to tighten up by the examiners, who are oddly enough employed by the very goverment that is meant to "serve the people".......it's just a big circle.

    October 19, 2010 at 5:08 pm | Report abuse |
  5. Tracy

    ok I am thining of buying a new home already on the market. Builder bought existing tear down home for 410k and has new 4 br/3.5 bath home with finished basement and attic listed at 1,089,000. plenty of granite countertops , hard wood floors, crown molding and wainscotting. Not luxurious but above avg finishes. What would be the lowest the builder will accept ? 1.09 is original listing price. For a comparison from my research builder built a smaller scale but similar home that was originally listed at 699k and sold for 629k – tear down cost 250k. Homes are located in NJ close to nyc transportation.

    October 19, 2010 at 5:09 pm | Report abuse |
  6. Glad to be out

    Wow, these builders are dumb. The housing crisis and recession got rid of a lot of them, but clearly not enough. I formerly worked in the homebuilding industry in a boom town, and it was disgusting. I watched a pretty well-known builder slip a governor an envelope of cash as he shook his hand during a party once - there was a bill coming up that affected environmental and municipal impact fees. Four years later, after the bust, that industry was in shambles, and I can't say that I feel sorry for them - even though it has affected my ability to sell my own home for what I paid for it (I was one of the ones who was caught in this theory of the limitless boomtimes). It really was a good old boys club of builders and lenders cashing in on citizens that weren't smart enough to figure out that it was all conjecture and marketing. I'm kind of ashamed to have been part of it for a couple years. I'm glad banks are being tight...but in reality, they should have been tighter with their money before, because if they had been, iit would have been less painful now. Nonetheless, just because a builder can pull permits doesn't mean he should be building. It wasn't just lenders who got us in this mess, it was collaboration with the home building and commercial building communities. Countrywide had a standing option to buy the mortgages sold by Pulte's mortgage division, and that mortgage division was owned by a builder, which meant that mortgage company was designed only to lend money as fast as possible and to get the best benefit for Pulte, not their customer (the home buyer). If that's evil and dangerous not collaboration, then I don't know what is.

    October 19, 2010 at 5:11 pm | Report abuse |
  7. Dennis

    Derf a bank thing money always makes money. Prob the banks want the same ole profit from yes-ter-day. 20011

    October 19, 2010 at 5:12 pm | Report abuse |
  8. julie

    Interesting topic as my husband and I just got approved for a construction loan but unfortunately the fees associated with the loan are so high (>40K) we have decided it's best to save over the next few years and pay cash for the house we want to build.

    October 19, 2010 at 5:49 pm | Report abuse |
  9. John N Florida

    The only reason the banks are still holding the cash is to help the Republicants make their case that Obama is failing.
    As soon as November 3rd arrives, the banks will start turning loose.

    October 19, 2010 at 5:54 pm | Report abuse |
    • mrk

      We can only hope you are right...

      October 19, 2010 at 8:31 pm | Report abuse |
    • Common Sense Solution

      That, too.

      October 20, 2010 at 6:40 pm | Report abuse |
  10. John

    This is what started the housing boom-bust. Builders speculating while there was a sufficient number of existing homes available. By building homes with way more size and extras, they drove up the price of homes which had to be sold, so banks provided financing to people who purchased more home than they needed or could afford. It is one thing to build on contract, but these megabuilders built large tracts of homes that went unsold, or ended up in foreclosure.

    October 19, 2010 at 6:01 pm | Report abuse |
  11. Common Sense Solution

    Why does ANYONE need to build homes with the glut of foreclosed property on our hands now - some of them brand new and never before lived in. Home buyers can purchase those homes, right?

    October 20, 2010 at 6:32 pm | Report abuse |
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