Clay Sparkman
Back in January, in my post entitled, “Won’t somebody please call a plumber … the banks are clogged,” I addressed what I consider to be the essential question regarding what it will take to get the real estate economy on track and moving in the right direction assertively and with confidence again.
And now, nearly six months later, my final paragraph seems quite equally relevant.
“And so even though a lot of good things are happening with our economy as of late, real estate prices will not correct until lending institutions provide adequate funding once again to owners and buyers—and the economy as a whole will remain at least partially broken until this occurs.”
There used to be a lot of talk about getting toxic assets off the books and getting banks to lend again, but I hardly ever come across serious discussions of this issue in the financial press these days. It is as thought government officials and journalists and such have decided that this question is just too difficult to answer and thus should just be ignored. Like a stray dog, maybe if we don’t make eye contact it will just go away.
I used to think that the banks would have to begin lending again as soon as they cleaned up their books a bit. After all, if a bank doesn’t lend, what then does it do, and wouldn’t it go out of business? Well it turns out that, “no” it is not necessarily so. From what I can tell (and this is not a terribly informed position mind you), many of the banks and bank-like entities have taken to investing in various commodity style investments. They have effectively become investment houses, and are doing quite well, thank you.
So I pose the question to my dear readers, as I honestly don’t have a clue: what will it take to get banks to start lending again—and I’m talking about loans across the spectrum (residential, commercial, development and construction)? If you have a position on this matter, please share it with the group. Or if you have access to an informed article that seems to reasonably address the question, won’t you please pass it along?
I’m sure we’d all like to know.
— Clay (clay@privatemoneysource.com)
Tags: economy, hard money investing, hard money lending, hard money loans, investing, private money investing, private money lending, private money loans, real estate, real estate investing, trust deed investing, trust deed lending, trust deed loans
