BULLISH on Residential Assets ! Commercial Loan Constriction

[Danielle Davenport]

Bullish on Residential Values based on Constriction and Escalation in AD&C Loans
Loan availability is down 70% & Rates have doubled to 15%

What are your thoughts?

Tightening credit and increased rates for builders on a Design and Construction (D&C) project. This could be influenced by various economic and market factors. Here are some potential reasons for such a scenario:
Economic Conditions: Tightening credit and increased interest rates may be a response to broader economic conditions. Central banks often adjust interest rates based on inflation, employment rates, and overall economic health. If there are concerns about inflation or economic overheating, central banks might raise interest rates to cool down the economy.
Credit Market Conditions: Changes in credit market conditions, such as increased perceived risk, could lead to higher interest rates for borrowers. Lenders may tighten their lending criteria or charge higher rates if they anticipate higher default risks.
Construction Industry Trends: The construction industry itself may experience shifts in demand, material costs, or labor availability. These factors can influence the cost of construction projects, leading to changes in financing terms.
Regulatory Changes: Changes in regulations related to lending practices or construction standards can impact the cost of projects. Regulatory requirements may increase the perceived risk for lenders, leading to higher interest rates.
Supply Chain Disruptions: Disruptions in the supply chain, such as shortages of building materials, can drive up costs for builders. Lenders may respond by adjusting rates to account for these increased costs.
Market Sentiment: Investor sentiment and market perceptions can also play a role. If there is uncertainty or perceived risk in the market, lenders may respond by demanding higher interest rates.
If you are involved in a Design and Construction project, it's essential to stay informed about economic conditions, market trends, and regulatory changes. Additionally, maintaining open communication with lenders and staying flexible in project planning can help navigate challenges associated with tightening credit and increased rates. Consulting with financial and legal professionals is advisable for personalized advice based on your specific circumstances.