What Home Builders Can Learn from 2009

Most home builders are more than ready to put 2009 behind them. The mortgage crisis had a domino effect across the economy but really put home builders behind the 8-ball this past year.

There were some changes that we think are for the better such as the slow down of McMansions due to consumer demand lessening and hopefully that trend will continue, but for the most part there were many new challenges that both homeowners and home builders faced in 2009 that weren't applicable earlier this decade.

Builder online highlighted their top 9 and we pulled these three as the most damaging. Do you agree?

Evaporated Financing
Banks' reluctance to loan money hit both builders and buyers of homes in 2009.

Banks pulled construction money from builders, effectively putting many private builders out of business unless they were able to find alternative sources of money from friends and family, private equity funds, or had personal funds squirreled away that they could tap. (Click here for strategies on avoiding a credit crisis.)

Again, this hit private builders harder than public builders, but the publics didn't escape the credit crunch either. Many shut down their revolving lines of credit or lowered their balances when banks started charging more for the money and adding more requirements for access to the cash.

Time is Running Out for First-Time Homebuyers to Grab $8,000, or is it?

The $8,000 tax-credit for first-time home buyers seems to have boosted real estate markets across the country. From Raleigh to Portland, tentative first-time buyers are taking the plunge.

The program is set to expire Nov. 30, 2009 but lawmakers are considering extending the deadline as well as raising the tax-credit to $15,000.

Details on Obama's Housing Plan

Regardless of what you think of President Barack Obama's initiatives and approach to assisting homeowners, here is a core breakdown of his housing crisis plan.

1. Refinancing help for four to five million homeowners who receive their mortgages through Fannie Mae or Freddie Mac
2. New incentives for lenders to modify the terms of sub-prime loans at risk of default and foreclosure
3. Steps to keep mortgage rates low for millions of middle class families looking to secure new mortgages
4. Additional reforms designed to help families stay in their homes

The Industry Standard for Contractor Markup

Pardon our Dust raises a good question about contractor markup costs. The homeowner feels 22% is way overboard but from the comments and through a bit of research it looks like 22% is actually quite reasonable. Despite what people think or talk about there is no industry standard for pricing remodeling jobs. Successful contractors run their business at the margins that suit them and what the market will bear.