Obtaining a ground-up construction loan is largely dependent on the viability of future real estate market activity as this is directly correlated with how readily the new property will be able to be sold quickly at a competitive price. Accordingly, for those in the real estate development sector, it’s important to have an up-to-date and detailed understanding of both the national market dynamics and the more specific localized transactional activity in the geographic area the majority of your business operations are concentrated in. To that end, here is a handy overview of the current state of affairs both nationally and in a few select local markets that are exhibiting promising data for sustainable growth and development potential. Use this information to inform your decision-making process as you plot out your 2021 development points.
The National Scene
Single family construction permits closed out 2020 and kicked off 2021 on an encouragingly high note. For 2020, the overall amount of single-family permits issued totaled 977,863 across the U.S.—representing a 14.5% jump over the previous year’s mark of 854,158. This increase was distributed relatively equally across all four major geographic national regions. The South reported the greatest increase by 16.9%, followed by the Midwest at 13.1%, the Northeast at 11.6% and the West at 10.5%. Over the course of 2020, 45 states experienced growth in single-family permits issued, with Vermont recording the best growth rate at 45.7%. And while the majority of major markets are projected to grow in construction activity as the economy rebounds from the COVID-19 lockdown, here is a closer look at three markets that the statistics suggest will be particularly active on the construction front in the upcoming months—meaning funding opportunities will be abundant in these areas for savvy developers.
If you’re looking to land financing for a ground-up construction loan, look no further than Jacksonville, Florida. There were 12,555 single-family residential building permits issued collectively across Duval, Clay, Nassau and St. Johns counties in 2020, which is an increase of 21.4% from 2019 according to data compiled by the Northeast Florida Builders Association (NEFBA). NEFBA President Keith Ward stated that despite COVID-19, builders are busier than ever before in 2020: “COVID did not really slow down the construction business, commercial or residential in Northeast Florida. I think there is such a high demand for housing right now that we will be able to keep moving forward.” Construction activity is showing no signs of slowing down in 2021. With a substantial influx of new residents to Northeast Florida during the pandemic, demand for housing prompted by a low-inventory market means that construction deals are primed to increase.
They say everything’s bigger in Texas, and that certainly holds true for the recent construction industry projections, with data from the National Association of Homebuilders indicating that Austin issued 21,653 permits for single-family homes in 2020. Historically low mortgage rates and robust population growth stimulated housing demand across the entire state last year. And for 2021, demographic trends including the steadily aging millennial population and out-of-state migration will continue to fuel increased demand for new housing options, which is exactly what developers want to hear. There is particular demand in the median and below-median price categories located in the suburbs or outer city borders where land costs are lower—a trend that was prevalent prior to the onset of the pandemic but has become even more pronounced over the past year.
The Triangle area of North Carolina as a whole has consistently boasted outstanding construction industry statistics, and that track record of growth has continued throughout the past year and is anticipated to continue in the upcoming months. Ground-up construction for warehouse space is particularly strong in this area, where there was 4.2 million square feet of net absorption in 2020. Overall, construction in Raleigh remains active with over 1.1 million square feet currently under construction in all property development types across the regional market. Developers should have no trouble obtaining financing in order to get their project off the ground in this market.
If you are in need of a ground up construction loan, reach out to the private lending experts at Express Capital Financing today. Our team offers great rates and terms on new construction loans and would love to partner with you on your next real estate investment.