After the last real estate crash, you did not see commercial banks financing construction projects. And, the banks didn’t just implement harsher lending standards or impose stricter requirements. Instead, most banks straight up stopped lending to developers. Although it seemed a bit extreme, too many construction projects had floundered, and many development companies simply handed the partially constructed buildings back to lenders.
However, now that real estate professionals, financial gurus, and fortunately the media (which seems to be able to singlehandedly spur or spurn economic optimism, more on that in another post) are openly acknowledging the rebound of the housing market, more and more banks are slowly easing back into the construction lending pool.
In general, lenders are still cautious about lending to average buyers in the market for the current Miami condos for sale. It’s a bit unfair really as it penalizes the middle class. The fact of the matter is that many home-seekers in South Florida buy in condo buildings, and surely banks can figure out a way to finance such purchases. It’s particularly unfair that it can be difficult to obtain conventional financing to buy a condo when we learn that hundreds of millions of dollars are provided to the developer who is constructing the very condo building in which these buyers may want to reside. Obviously we’re glad that lenders recognize that the South Florida real estate market is on a healthy track, and it’s great that banks are financing construction again as that will further fuel the recovery. Hopefully, these financial institutions soon loosen lending standards for regular folks as well.