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Fallout: The Financial Crisis

Builder explains spike in housing starts

Kai Ryssdal Jul 17, 2009
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Fallout: The Financial Crisis

Builder explains spike in housing starts

Kai Ryssdal Jul 17, 2009
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TEXT OF INTERVIEW

KAI RYSSDAL: The housing industry is today’s example of economic reports that make your head spin. We learned this morning that new home construction is up. And down. Up from last month. Way down from a year ago. Still, an index that measures confidence among home builders is up. We were curious about where all that confidence is coming from.

So we called Dean Mon, he’s a real estate developer still going strong in northern New Jersey. Good to have you with us.

Dean Mon: Thank you, nice to be with you.

Ryssdal: I have to tell you sir, we called around to a whole lot of people before we found somebody who was still building and selling houses. Why would the inventory that’s out there are you still building?

Mon: Well, I think last year when the first-time home buy tax credit was passed and we were all excited that was going to kind of stimulate the market. Some of us builders that have projects about to go in the ground kind of took a leap of faith and said, “Well, maybe we need to get started, because this is going to stimulate demand.” Unfortunately, because of the first part of the credit was refundable — you had to pay it back to the government — the market really didn’t get going until, I believe it was earlier this year, late last year, when they really did away the provision that you had to pay it back.

And we have seen a tremendous uptick, I think, all across the country, pretty well, where builders are beginning to see the credit really working.

Ryssdal: Define tremendous uptick for me.

Mon: I’ll tell you my case. We opened up the project for sale in February and today we almost have 21 contracts.

Ryssdal: Who’s buying, this is entry-level housing you build?

Mon: This is entry level, appealing to teachers, nurses, some policemen, municipal workers, you know, families making between $30,000 and $80,000 a year.

Ryssdal: I don’t know if you’ve heard sir, but there’s this credit crisis out there, you know, lending and financing are frozen up. Where are you getting your financing?

Mon: Well I’m getting what we call the “A, B and C acquisition and development,” that is a problem. But I’m being very fortunate to work with my local bank. The community banks, I think, are still lending to some extent.

Ryssdal: What is the next six months look like for you, in your particular part of the housing market?

Mon: I think it looks very good. Of course, we’re going to come upon the December 1 deadline when the credits are going to go away. We’re hoping that having seen how much job creation, because housing is about creating jobs. And we uptick 100,000 housing starts, we create 300,000 to 400,000 jobs.

Ryssdal: When you saw those housing figures this morning, does that jive with your experience?

Mon: Yes. I was very excited, because I think, I’m not ready to say we turned a corner, but we certainly begin to peek around the corner

Ryssdal: Dean Mon, a builder and developer in northern New Jersey. Mr. Mon, thanks so much for your time.

Mon: Thank you.

Ryssdal:

Mon:

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