This is the third contribution discussing our interpretations of how real estate and lending is evolving.  The first article focuses on how the lending climate has changed.  The second article touches upon Buyers’ changing expectations and how the Lending model is evolving to meet the new expectations.  This third contribution briefly comments on the improving economy and how this may impact the matter.

There are several signs that the economy is on the uptick.  One indicator is expenses in Manufacturing are on the rise. Indications are that companies that produce Inventory Tracking Software and other manufacturing based software and systems are seeing their revenues sore.  In fact, several clients have informed us that their orders are up over two times from last year.

Blue Moon is dedicated to helping businesses define, implement, and support their information systems to meet their strategic business goals. They do this by providing strategic consulting services and creating outstanding off-the-shelf and custom business applications. Their applications are in use by over 1,000 Microsoft Dynamics GP customers worldwide, providing critical business functionality and contributing to the success of these organizations.  Their business has been steadily improving since 2010, and 2014 was their most successful year since 2006. All of their customers are distribution and manufacturing businesses. These industries are investing steadily in their information systems again, which provides a clear indicator of their business health and positive outlook in their marketplace.

As businesses continue to grow, so goes the financial status of the business owners, their employees and independent contractors. With this comes an increase in demand for a new and better living situation. Likewise, as deposits and savings increase, so follow credit ratings, and as Murphy’s Law holds, interest rates.  We would therefore anticipate that the cost of borrowing will unfortunately increase, but the likelihood of qualifying will improve.  With the relaxing of lending regulations, which I touched upon in, Not Your Grandfather’s Mortgage Disclosures, I predict a return to the more traditional lending model for some.  However, it seems that the model will still not work for many, as it always seems that expectations increase with opportunity and status.  And, as lending institutions increase their rates, the gap between the rates with “hard lenders” will predictably narrow.

So, in summation, we expect that the signs of solid economic growth are becoming evident.  We believe that transactions will increase in number, and that private lending will continue to be a viable alternative even though institutional lending will strengthen.