As the Builders Association of the Twin Cities continues to report strong increases in the number of building permits and units issued, I’ve heard from several small builders that the difficulty in finding construction financing is impacting their ability to take advantage of the dramatic increase in buyer demand.
With the quickly approaching and ever-important spring market, builders are looking to build up their inventory of available homes but finding that few lenders are willing to step up to the plate with financing for homes built without a buyer contract already signed, often called “spec homes.”
This means that smaller builders with limited resources will likely be hampered in the housing recovery. Bigger builders with deep pockets, especially the nationals, are able to dive back in to the strengthening market with fervor. Since many smaller builders went under during the housing crash of the mid 2000′s, the national builders are poised to grab an even larger share of the local new home market.