Ground-Up Construction Market Update

The COVID-19 pandemic prompted unprecedented growth in several local real estate markets across the country—with some areas experiencing more than a 50% spike in home prices in the past year alone.

There are a multitude of culprits behind the sudden rise in transactional activity. People are spending more time at home and, subsequently, are looking for more square footage. The sporadic economy spurred investors to seek more stable assets compared to the stock market, leading many of them to snap up available properties to hedge against rising inflation. And while inventory levels initially struggled to accommodate the increased demand from aspiring homebuyers, the construction industry has gradually ramped up production—building new homes to help rebalance the market.

These ground-up developments present a unique opportunity for savvy investors looking to diversify their real estate portfolios with additional streams of passive income. Although these properties are in high demand thanks to their top-of-the-line amenities and the general lack of available homes, an important factor dictating the ultimate return on investment (ROI) is location. Accordingly, the experts at Express Capital Financing have provided the following break-down of some of the best markets across the country to invest in ground-up construction projects.

1. Austin, Texas:

Sure, Austin does not have a comparable population density to Los Angeles or the Big Apple, but it boasts plenty of key cosmopolitan amenities plus a fantastic year-round climate and favorable tax laws that have buyers flocking in droves to this Texas oasis. What’s more, the rapidly growing city is a major draw for notable corporations that are bringing scores of job opportunities to the area, including Google and Tesla. New homes are being built to accommodate the influx of new employees, with the Austin Housing and Planning Department anticipating that the metropolitan area will continue expanding by 2% annually over the next three decades.

1. Tampa, Florida

Essentially every metro area in the Sunshine State has experienced significant growth and price appreciation since the beginning of the pandemic; however, Tampa is worth mentioning specifically due to its impressive local economic performance. The city added nearly 85,000 new employment opportunities in the past year alone, a trend that has spurred the construction industry into action with ground-up developments being steadily added to the market. Like Texas, Florida offers zero state income tax and has a similar warm climate that is sure to draw new transplants for years to come. Real estate investors would do well to invest in a Tampa ground-up construction project where they certainly won’t have to be concerned with any prolonged spans of vacancy considering the average property typically only spends 13 days on the market before being sold.

1. Raleigh, North Carolina

Almost 1.5 million residents call the Triangle area of North Carolina home, and with the local population projected to expand for the next decade thanks to the wealth of employment and education opportunities investors should take note of this up-and-coming, dynamic real estate market. Properties sell fast here, usually only lasting five days on the market. With new builds being added at a healthy rate, there are plenty of opportunities for investors to get involved early on in the process and position themselves for a healthy payday.

1. Nashville, Tennessee

With a truly diversified local economy and booming tourism industry, Nashville is a popular hub for visitors and new residents alike. High numbers of young millennials are moving to the area due to the dearth of employment options and numerous social and cultural attractions. Properties are appreciating close to 3% annually, making it a smart move for real estate investors to acquire Nashville ground-up construction homes while they are still affordable.

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Whether you’re a small business, medium firm, or large corporation, Express Capital Financing can help you get the capital that you need, when you need it. Our services include bridge loans, business acquisition financing, hard money loans, and commercial real estate loans. Our team of highly experienced financial professionals are happy to help with your real estate financing loan programs. We are dedicated to customer service and want to work carefully with your organization to develop a custom financing plan. If you are interested in learning more about our services, then feel free to contact us today. We’d be happy to offer you a free analysis of your company’s financing needs with no obligations.