Well, we wanted to start this process well over 2 years ago...but things were already bad and we have just be afraid to move forward. Things here in the Northern Virginia area are still tough. No real improvement. We still are unsure if we should go for it or not...but figured there is no harm in deciding on the house plan and see what builders and the banks are going to tell us. Just talking to the banks, they are pressing you to have your current home sold and you are somewhere renting. No less than 20% down. And only a few locate banks actually do New Construction loans. But they are out there. So I hope we will know which plan FOR SURE so we can start something by June. If we can not start then, this is still a great forum to get ideas and learn about the building process. So thanks to all that post!

Yeah!!! We are so glad to be here! Frankly, the housing bust actually made it possible for us to custom build in our dream neighborhood...the upper end took a much harder hit than our previous home, which we had lived in for 14 years. Last spring, my husband said "NOW" is the time to buy the lot and contract to build. We made a decent profit on our home, and are getting to build in a million dollar n'hood, a house that would have been that much 3 years ago...for a LOT less. It makes all of those years of patiently waiting and dreaming worthwhile! :) I love seeing everyone's awesome plans and lovely homes on this forum!

well now i definitely feel old! we'll be done by the thaw. hope!

In stark contrast to bevangel's take on the economy based on the new postings, here is the reality for us in WV: nothing will appraise in this market, so it looks like we are done. We had one plan and got a low appraisal, so we downsized and cut back on the high-end items to make the numbers work only to be told by the bank (small regional) that they weren't writing construction loans any more (of course, after we jumped through their hoops). Took it to another bank who was working with our builder and said it would work, shouldn't be a problem, and now the appraisal is $85K less, in just one month. Despite our rebutting what we thought were obvious flaws and mistakes (e.g., using an 18-year old log house and not adjusting for age/condition; land value comps using small unrestricted lots advertising "double-wides welcome"; not using 2 recent MLS land sales at prices similar to what we paid), they mumbled something about it being a less than perfect process and the number was not changing.

I guess those already building have a different market or more cash than we do. If you have a plan, but haven't had an appraisal done, better sit down and think about a plan B. In hindsight, I guess I should have done more due diligence than relying on the "experts", builder, banker, etc., who were all optimistic; never a "we might quit doing construction loans, depending on market conditions in the next few months". I have another builder friend who said he has had five new house projects also fail b/c of the low appraisals.

So, we will have to decide whether to hold on and hope it gets better within 2-3 years, of course at much higher interest rates and probably build costs, or settle for a good deal on something for sale and eventually sell the lot we like so much to at least break even.

Sorry for the Debby Downer rant, but that is our reality. Thanks for all the great advice, comments, place to vent, and maybe it will all work out. If anyone has any ideas on how to beat the system, I'm all ears. Good luck to all!

You know, you are actually right, spf5209. Our builder has had a couple of deals fall through due to the difficulty of clients obtaining construction loans. It was pretty hard to get...we had to sell our home first (we are renting now.) We had a couple of friends who built two years ago and one of them had their previous house sit on the market for a year after their new home was finished. It was horrible, and frankly we couldn't afford to do that. Things looked pretty bad for a while until they finally sold (and obviously for a great deal less than their asking price.) It is a horrible housing market in general...we just got lucky that we had been in our home for long enough that we had built up substantial equity AND our previous home was in an excellent location. A suggestion...are there any other small local banks you can try for the construction loan? We used a small bank, we were previous customers and knew the loan officer, who also knew our builder (who also lives in our town)...I think the fact that we were all comfortable with each other helped, and I do think they WANT to make loans, if they possibly can. Don't give up!!

spf- Check with other banks, credit unions and maybe a few mortgage brokers. Even if they can't get you the building loan, they may have some good ties with appraisers and other people you'll have to work with.

We've had different appraisers look at the same land within a few week period and come up with completely different numbers! Yes, they all have to recognize the current market, but some are better with researching comparable properties than others. It sounds like yours was being a little lazy...an 18 year-old log cabin???

Best of luck with your project and don't give up until you've tried every financial avenue. As long as you can afford your home payment, keep looking for better financing! :)

Thanks for the encouragement. The problem has not been with the banks, it is with the appraisal system. Due to the HVCC (I think that is what it is called) law passed in reaction to the Wall Street created catastrophe, lenders are prohibited from choosing or influencing appraisers. In my experience, they will not change an appraisal even for valid reasons.

It does seem like the economy is improving a little, but it is very spotty, as is the real estate market. Here in FL,house prices continue downward, dropping about 5% in the last month. Our house is worth well less than one half of the peak a few years ago. The total number of houses sold has gone up a little, though, which is encouraging, despite the falling prices.

The economy itself is showing some signs of life, so real estate will inevitably follow, although with the strict lending guidelines, we are now in uncharted waters. I work for a manufacturing company, and we increased 27% in 2010, and will increase at least that much more in 2011. Auto companies are increasing production, some more than others. I don't see a rapid boom this time, though. There's too many bad loans and foreclosures out there.

As for us, we are going ahead with our plans to build soon. We have given up on selling our FL house any time soon, and, depending on the real estate market when we are ready to move to our new home, we might just hold on to it and rent it out instead. By cutting all of our expenses to the bone, we have saved enough money to do our build out-of-pocket, so we avoid having to sell the old house, or borrowing money to build the new one. I run into a surprising amount of people with this 'new' mindset, partially because they have learned their lesson about money, and partially because they don't have any other options. It's a changing world.....