Cash may be king when it comes to buying a home, but for the nation's home builders, it's princely to have their own mortgage companies.
According to Hanley Wood Market Intelligence, cash deals for the 12-month period ending June 30 are up 77% compared to unfinanced sales that occurred back in 2007.
But perhaps what's more remarkable is that the percentage of new home sales financed by the nation's 'megabanks' has fallen by a greater rate than the overall market, HWMI reports. For the July 2010-June 2010 period, the big banks backed only slightly more than half of all new home sales.
While cash siphoned off some of the business, another big chunk was taken by captive mortgage companies owned by builders themselves.
"With the exception of Wells Fargo, national megabanks have dropped their support of new home buyers," says HI's Jonathan Smoke. "Meanwhile, big builders with captive mortgage companies have proliferated."
Indeed, Smoke says that builders with a mortgage company under the same roof may have a competitive advantage over builders without one. That's particularly true in the entry-level segment, "where credit has tightened the most and will likely get even tougher in the months ahead."
