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Construction Activity Check-in (plus: the benefits of cash-out refinance)

Construction spending rose by 0.1 percent in January (2014). Yahoo described the data as “unexpected,” in part because harsh winter weather can negatively impact the housing market.

Residential construction spending rose by 1.1% month-over-month for a total of 14.6% on the year.

Construction activity continues to rebound from its prolonged bubble-induced lull. Demand for housing has increased as the economy improves. See graph below for year-over-year spending changes:

construction-spending

(Graph from Econoday, hosted on Bloomberg.com)

Any questions about home loans in California? We are The Mortgage Experts: ask us anything! We have a loan program to fit every need. Call 805.543.LOAN or email us today.

Construction spending still lags far behind bubble-year activity. The January 2014 pace of $359.9 million for residential spending was nearly half of the $649.9 million pace from January of 2006.

Closer to home, the San Luis Obispo County Department of Planning & Building releases monthly statistics on building activity in unincorporated areas of SLO County. Last year, we put together a report that tracked the drop – and recovery – of construction in the County through 2011/2012. (Read the full thing here). Construction activity dropped in SLO County during the housing crash and is only now starting to rebound (see graph below).

total-application-intakes

Residential renovations were the first construction activity to experience post-bubble growth, as families took to smaller-scale projects on existing homes rather than “moving up” or moving out.

More recently, the low home prices and record-low mortgage rates helped the housing market recovery accelerate. During this time, new home construction increased, which has helped the ratio of new home / renovation spending to even out. Jed Kolko, Trulia’s chief economist, wrote the following on Twitter:

Owners are able to remodel by withdrawing cash from their mortgage using a cash-out refinance loan. Constructions loans and special programs (such as FHA) offer funding for home renovations, but according to Daniel Podesto, co-owner of Central Coast Lending, it is best to find conventional offerings when possible.

“Ideally, you would find conventional finance to avoid paying the big FHA mortgage insurance premiums,” said Daniel Podesto, co-owner of Central Coast Lending, a mortgage lender based in SLO County. “A lot of time, borrowers can bring down their payment and still get the money they need.”

[Click here to submit an online loan application or contact us to arrange a free consultation]

Situations that may benefit from cash-out refinances include:

  • Cosmetic upgrades: update your kitchen, bathroom, landscaping, lighting, counters, flooring, and more.
  • Structural upgrades: growing family? Need more space? Add a bathroom, bedroom, garage, or any other square feet.
  • Maintenance: replacements for roofing and gutters, fixes from insect damage and dry rot.
  • Debt consolidation and other financial reasons: that’s right – cash-out refinance is “no strings attached.” Borrowers can consolidate debt with the additional cash or use it for anything from investments to comfort.

Give us a call at 805.543.LOAN for all of your home finance needs. We have a loan program to fit every need – now including rare loans for mobile and manufactured homes!

 


Central Coast Lending is a California mortgage broker and direct lender based on the Central Coast of California in San Luis Obispo County. Call us today at 805.543.LOAN or email info@centralcoastlending.com to set up a free pre qualification. We are The Mortgage Experts: ask us anything!

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