For my 2 cents. I had a hard time getting a loan this summer. I was one of the people you hear in the news with excellent credit, plenty of money down, and owned the land outright. Banks did not want to touch loaning money in my area because the housing market had shut down so there were no comparibles for appraisals. Finally, I did find a bank that was willing to lend, but I had to upfront more money down because with the depressed housing market in my areas my appraisal was lower than it should have been. But will it ever be a good time to build other than now? Do prices ever go down on anything? I doubt it.

We used Bank of America for our Construction to Perm (Owner-Builder) back in April, and later found out they shut the program down the next month. Look at local banks and Credit Unions for financing. CU's thrive on loaning to individuals that the big banks ignore. Do be prepared to need good (or great) credit scores, 20%+ down and a reasonable appraisal.

We planned our build for about 3 years. Paid cash for the lot,saved enough cash for about a 70% down payment with the intention of owing the exact same mortgage balance on our new house as our current house. Keeping our payment the same. That was our goal anyway. Its not like we needed to move either. Our current house is big enough and nice enough to have stayed put. Wife had house fever for the last few years.
We signed our building contract in June and thats when the bottom began falling out of the economy. Seemed like everytime something good happened with the build you pick up the newspaper and go oh crap. We would go from foundation was dug how exciting to Dow dropped 800 points oh my God. Honey the shingles are on and look great but oil is up another 30 bucks a barrell so they cost more.

You would also think now would be a great time because many builders and subs are slow. But to me it seems they are charging MORE to make up for all the lost work.
Also I have found flooring,appliances,cabinets,countertops,are all still highly priced

We are framed and mechanicals are almost in so its too late for me but I think if I had to do it over again I may have waited,stayed in my current house which is just fine and kept a hold of my cash.

I agree with the others; think about it as "doing your part for the economy"!
Try Credit Unions for financing and be prepared for either having more money down or own your property free and clear or both. As for pricing some things are up but our lumber package was down from the original allowance.
The scary part is both our builder and our local cabinet maker have no more work after our project. Our builder said that hasn't happened since 2000!!!!!
These are uneasy times but dh and I want to carry on with out project and see it through to the end!!!!

We talked to several builders to get a bid for our house. They were all reputable big builders who have built Parade homes in the area. I think one of them really marked everything way up to compensate for his lack of work. So, I think that he was trying to earn the price of 2 houses on our one project. Most of them were in the same general ballpark, but the one builder was $300K more. That's a huge difference. Btw, the other builders told us that their prices have come down a lot since 3 years ago bc labor is cheaper these days, as well as some materials, like lumber and drywall. Anyway, we're glad that we shopped around.

If you can, do a cost comparison between building and the current value of a similar existing home. We finished our home (using 70% our own cash) a year ago. The day we moved in it was worth 20% less than the cost of construction.Today its worth still less- we know because we have been trying to sell it since June. In my opinion, right now purchasing an existing home is a much better deal than building, when you can buy a home below the cost of building it.

We just closed on our building loan 3 weeks ago with a local bank whose had all of our busniess for over 10 years. I was a little worried, but my DH said we are good..we pay our bills and have great credit.

On the contractors, they are all slow and are waiting for their turn to come in and do their thing. We have not had to wait, and so far I'm under budget on everything.

Congratulations!

A couple tips for you during construction that will help make your home more cost effective in the long run.

Radiant heat tubing Heat naturally rises. In this system you bring the floor up to temperature and then simply maintain. example

Tankless water heater and boiler cuts out the energy wasted keeping a tank full of water heated and only heats the water as you need it. example

Shade trees - cut down on air conditioning as does an
Open floor plan to allow for natural draft air circulation

All these things have helped keep our home from sucking us dry during the tight times.

We also had a thermal mass wood stove for a secondary source. Once you got the thermal mass warm it radiated heat for days after the fire had gone out. But, some building codes do not allow wood heat.
example

Maybe these ideas will help you love your new home even more!!!

Our bank, which is a smaller, but stable bank has changed their rules 3 times in last 4-5 months. I have been waiting on quotes for over 6 weeks now that keep pushing us back. Even though we wouldn't fall into the subprime, buy it now above our means group, (we have scores over 750, decent income, have more than the 20% down,) they are now looking for proof of reserve for overage ~%10, as they are adamant there will be no money available to us, for refinance after completion. Keep in mind this is for a one close construction loan. My banker understood my being upset about having to have use my 401k as proof, we have been and are a long time client of the bank, and I feel as even though we did everything right by buying the land first and paying it off, we are getting the hard time becuase of others lack of responsibility and integrity. Two years ago when we bought the land, it was about as easy as can be, at least 25% down, did all the paperwrok and closed in 3 weeks. Times they are a changing. The banker agreed that in theory they are not looking for 20% in that case but really 30%, and if that was the case why wouldn't we just put the 30% down if we had it available. Also it is calculated by the lower amount of either what we are asking for or what it is appraised at, so even though I will be doing some of the work, and a family member and I framing, I still need to submit quotes to show all of that in order to get 75-80% financing. In the end if I defaulted the day I got my CO the bank would own the house at 65-70% of today's true appraised value right off the bat. Thus they are going back to extremely low risk lending. Most other banks in the area have cut their construction loan programs, and I know of 2 people more than 50% through a renovation through home equity, where their home equity got cut, and there is not money to finish. These are not deliquent payers, in fact one had been in their house for 8 years no credit issues, and were doing an addition. It may sound ludicrous, and we were told we were fine everytime even as they changed the rules, but I see that it will affect everyone.
I also have seen contractor give higher prices in order to make up for possible slowdowns, while I have seen others give fair prices to keep themselves going.

my dh has been telling me about the financial crisis we are now experiencing for the past three years. i wanted to build as soon as we bought our property also three years ago. we started drawing but he wouldn't build until "it was time" as he said. architect kept telling him costs were rising and the longer we waited the more expensive it would be. he wouldn't hear any of it. i was so fed up and tired of living in our temporary house. we did get one bid in to build in sept of '07 and dh laughed. that same builder called a few months later wanting to submit a revised bid. it was a lot lower. subs were available and needed work. certain materials were down and dh finally agreed. now architect says he wants dh to manage his money. he never saw it coming. if you have been planning and have the money or are able to get credit and your finances are secure it is the perfect time to build. we have a small mortgage on the current property (temporary house is on the land) and will not take out a loan for the build as we will finance ourselves. it's all good. local vendors get work and we get our house at reasonable cost in a previously inflated market. the situation may be different depending on where you are, but for us the time is now.

We just broke ground on Tuesday (will post pics as we go).

The closing and funding with the title company took a lot longer than I was expecting (banks are scrutenizing every thing), however, we did not have any problems getting the loan. After talking to a local broker and MidCounty Bank, we decided to go with a small local bank instead. They gave us 100% financing on a jumbo and qualified us as owner-builder (without a construction advisor).

A little back ground, I work in the construction field (even though I have never built a house befoe, I'm involved with the design and construction process of various commercial and industrial buildings and facilities on a daily basis). The lot we owned is valued at $500K (yes CA is expensive, even though we are not in one of the expensive places). Because of the lot's value, our LTV was low and did not need any cash at closing. But my plan is to use that cash to pay down the loan to a conventional instead of a jumbo at perm closing.

You might think there is a credit crunch, but banks do have money and they do want to lend - they're just being more selective on who they're lending to these days. If you can get financing, I would build. My subs are all really good and come highly recommended. They are also available to work on my project now - instead of having to schedule you in with their other projects. The way I looked at it was you're able to put an all-star team together to build your house.

I wish you luck and most of all, be patient with the process and build if you can!

Well, not sure it is the right time, but we are about a week from breaking ground. That is, provided the bank's appraisal comes back ok tomorrow.

Let the games begin!!