Like much of the real estate market, the new-construction sector is starting to turn a corner. Builder confidence, buyer interest and construction lending are all on the rise. However, after being beaten down financially during the downturn, builders today are more inclined to pass along the onus of obtaining financing to buyers as opposed to providing it themselves.
Positive trends all around
Mike Kinane, senior vice president for retail lending products with TD Bank in Cherry Hill, N.J., says that the bank is seeing about a 20 percent increase in construction lending in 2012 compared to last year. He attributes the increase to rising confidence on the part of buyers who feel better equipped, in part thanks to record-low mortgage rates, to handle the added costs of new construction.
But it's not just buyers who are feeling more confident -- home builders are the most confident they've been in years. According to the National Association of Home Builders/Wells Fargo Housing Market Index, builder confidence is at its strongest level since near the peak of the market in June 2006.
Furthermore, with housing starts and building permits at their highest points since July 2008, construction activity is definitely on the rise.But despite the positive trends in recent months, builders remain guarded against potential losses and have thus changed the way they fund new projects.