Construction opportunities are still plentiful. Lenders just
need to be smart in the fulfillment of these loans.
Larger banks are being more selective:
Maturing market cycle and concentration risk in particular geographic markets or product types are making large lenders more selective in their construction lending.
According to the National Real Estate Investor, banks are also being more conservative due to new Basel III rules now in place.
Doors are opening for smaller community banks:
There continues to be a steady flow of capital, although the big banks have tightened their hold on construction loans and are more focused on serving existing clients.
This opens the door for small regional and community banks to fill the gap.
A Temporary Downshift for Early 2018
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The first quarter of 2018 proved to be a slight slowdown in construction growth. Although the year started off slow, an acceleration is beginning.
TOP MSAs Growth
36 of the top 50 MSAs will experience
expansion in 2018. Top 3: New York City
(-2%), Dallas (10%), and Houston(14%)
Predicting a 6 percent overall growth in contrast to recent years of almost double.
6% residential, sustained by 9% growth in single-family units.
Non-residential should have strong Institutional growth with education and public buildings growing 6%.
Commercial is expected to grow 2% with office leading at 6%.
Overall, non-residential is predicted to grow 4%.
Texas, Nevada, and New Mexico are the geographical leaders.
36 of the top 50 MSAs will experience expansion in 2018. The three largest MSAs, in terms of construction starts spend, are forecasted to be: New York City (-2%), Dallas (10%), and Houston (14%).