In a short slide presentation, National Mortgage News recently published a list of items constraining new construction financing (a reference link to the article is included below). The six major factors included
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rising land cost due to market appreciation
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new construction credit remains difficult to obtain with most lenders
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shortage of qualified labor
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pressure from the rental market
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younger buyers are waiting longer
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Limited credit facilities are still hindering the market
New Construction
NAIHBR members in a February 2017 survey reported findings consistent with some of the studies findings. Land lot prices and teardown opportunities have increased significantly over the last 12 months where many buyers who remained on the sidelines have now been priced out of the market.
Additionally, many builders named a lack of qualified sub-contractors as a current challenge to their business. Since the housing crash, many skilled tradesmen were forced into other lines of work, leaving an demand gap for builders and renovating GCs. Although market demand should eventually bring additional labor, for now labor costs for skilled trades is rising significantly.
About NAIHBR – www.naibrs.org/about/
