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Morning Briefing: Realtors react to new conforming loan limits for 2017

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Mortgage Professional America | 25 Nov 2016, 06:20 AM Agree 0
Realtors react to new conforming mortgage limits for 2017… New home sales down 1.9 per cent… Chicago is world’s most exciting city, no wonder inventory is tight…
  • Disgruntled Loan Officers | | 25 Nov 2016, 09:07 AM Agree 0
    Fannie/Freddie numbers should be closer to $500,000, not a lousy $9,000 increase. Keeping out of Jumbo pricing is the purpose of this. With interest rates rising it would've made sense to increase even more.
  • Jim Long | | 25 Nov 2016, 10:51 AM Agree 0
    I know my comments are a little off topic, but they do relate to the escalating cost of homes without adding value, which affects all of us in the industry.

    My company is a custom builder, building in what are considered "hot" markets.

    I have watched the cost of materials steadily increase over the past years with absolutely no reason other than greed by the manufactures and others in the supply chain. Pick anything used to construct a home from 2x6 studs to house wrap and explain why these items are increasing in price. The stud is in all probability purchased finished in central Europe at cost that have if anything dropped over the past five years, transported using fuels that cost sometimes one half what they were five years ago. Yet by the time this stud reaches the construction site we are being told by out materials suppliers that they are having to increase cost because their suppliers are increasing prices to them. An even better example would be products like house wrap a petrochemical intense product to produce. Yet the cost of this product increases even though virtually all items used in its production are at least half what they were five years ago.

    We as builders cannot continue to push these increases onto our buyers. Where the tipping point is I do not know, but there is certainly one. It may be time for contractors to work through their HBA's and purchase their dimensional lumber products through cooperatives. Large material suppliers will tell you that this is impossible. Our company was one of a few contractors that worked with the DOD in 2001 thru 2008 to convert government owned housing to new privately owned housing, these contracts well above 100M in value, so we were purchasing enormous quantities of materials.

    The volume purchasing we were quoted by some of the largest materials suppliers were escalating almost monthly. Our company sent a representative to Romania to source dimensional materials, and by doing so we reduced out lumber cost more than 50% FOB US ports. It is all about quantity and geography, if you are located less than 400 miles from and international port, and all purchases can be containerized, the savings are enormous.

    Of course there are a lot more logistics involved, but not as difficult as the national materials suppliers want you to believe. Ask yourself, can I use three containers of building materials a quarter, if so builders should get a discussion going to explore the possibility of purchasing dimensional lumber first, and then look at other items that could be sourced at a 50% discount.
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