Weakened economy stalls Sandy housing developments
Sandy, Boring and Mountain Village residents are not immune to the epidemic spreading across the country. A number of surveys have shown that the fear of losing income, inability to pay home mortgages or rent and dwindling investment values have people on edge.
Their reaction, too often, is to stop spending on the normal costs of living and to cut back as much as possible. Reduced sales and income have become daily headlines for many companies.
But that reaction could be at the heart of the dilemma the nation finds itself facing: how to stimulate the economy and move it forward.
Looking around Sandy, it is easy to see the construction industry is at a virtual standstill. The city has issued from zero to three building permits a month for the past four or five months. That’s a historic low.
Tracy Brown, planning director for Sandy, says there are about four subdivisions that have gone through some level of development (prior to construction) before coming to a standstill.
He says the reason could be that building has slowed and credit might be less available.
“A couple of (the subdivisions) are just waiting,” Brown said. “(The developers) either have to pay park fees or install a pump station or make improvements to the highway.
“And one of them is essentially done. But (the developer) hasn’t recorded a final plat, and I don’t know why, unless it’s the economy that’s not doing well. When they record the final plat they’ll be able to sell the lots or build on them.”
Even though Tom Orth of Orth Construction is putting the final touches on a subdivision near Dodge Park Road and 302nd Avenue, he is virtually unemployed. He has land on Bluff Road that he is not developing plans for, and he changed his plans to build a 14-unit townhouse complex near Ten Eyck Road and Hood Street. Due to an oversupply of townhomes, he made plans to install infrastructure for eight single-family homes.
But he didn’t install anything.
“My Ten Eyck Rim project has been approved by the city,” Orth said, “but I don’t think I am going to move forward on it at this time.
“I would like to build $200,000 homes there, but I’m just not getting any response from the market now. The economy is too shaky, and I don’t want to put more capital into it.”
Real estate agents and mortgage brokers are a little more positive about the market’s condition. There are plenty of safe home-loan options available for buying or refinancing, according to Kurt Nilsen, a mortgage broker from Pathfinders Mortgage who works mainly in Sandy. Nilsen says loans are not difficult to obtain.
“There seems to be a misconception that home loans are difficult or impossible to get,” he said. “This just isn’t accurate. Yes, home lenders have returned to requiring borrowers to fully document their income – a practice they never should have deviated from.”
Paula Siverly, a mortgage broker from Vancouver Mortgage who works in the Sandy area, echoes Nilsen’s comments and adds that a potential buyer doesn’t need perfect credit to get a loan.
Both say that loans are readily available under the Federal Housing Act and USDA Rural Housing Act.
“There is 100-percent financing with the USDA rural home loan program, and FHA will still do a purchase with 3.5 percent down and a 580 FICO (credit) score; that’s not perfect credit,” said Siverly, who also is president of the Sandy Area Chamber of Commerce board of directors.
Siverly and Nilsen agree that qualification requirements have been tightened to prevent people from buying “too much house.” After all, the brokers admit, that’s one of the things that started the economy’s downhill slide.
“As in all loans,” Nilsen said, “the FHA and USDA programs have debt-to-income ratio and credit-score requirements that must be met, but they are very reasonable and help to keep the loan safe for the borrower and lender.”
Siverly advises talking with a loan officer and checking into things that affect the choice of a home – such things as the client’s goals (children, stay-at-home parent, retirement, home upgrading).
“Your mortgage is a piece of your financial strategy,” she said.
But everyone’s situation is different, Nilsen said. He suggested contacting a mortgage broker to learn about all the options available.
“The bottom line,” he said, “is that interest rates are some of the lowest in history. Homes are much more affordable than they were two years ago, and home loans are not difficult to get.”