Construction And Development Financing Will Remain Tough To Secure

Bank of America, the largest bank in the United States, is currently looking at fewer than 10 deals nationwide where it is being asked to provide financing for residential development or construction. That in a nutshell is the state of AD&C financing for the housing industry, a topic of great concern for nearly every active builder across the country. NAHB’s new chairman Robert Nielsen recently told Builder that finding more capital sources for builders is at the top of his agenda this year. It wasn’t surprising, then, that a seminar titled “Obtaining Financing in Today’s Market” drew an overflow crowd at the International Builders’ Show in Orlando, Fla., on Thursday morning. What that audience heard, though, was not exactly encouraging. Yes, builders with compelling projects are finding funding for vertical and horizontal construction. And yes, capital is steadily, if slowly, returning to the housing sector. But that capital, in the main, isn’t coming from banks, and is not likely to for a few years more. The capital that is available from other investor sources can be pretty expensive and comes with strings attached that include fairly high return-on-investment expectations.

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