Fiscal Prudence Or Party Poopers? Traditional Banks Get Cautious About Multi-family Financing
After being blamed for profligate lending leading up to the housing crash of 2008, banks may have learned their lesson. A recent article in the WSJ reports that big banks are taking a step bank in financing apartment projects.
Banks seem to have taken this cautionary step in view of rising supply as almost 380K new apartment units are expected to come online in 2017 - according to real estate researcher Axiometrics Inc - spurring concerns about vacancies and rent growth, which has started to moderate in a number of large metros such as New York, San Francisco, San Jose, and Houston.
Developers are thus left to rely on non-traditional funding sources or smaller banks as well as putting more of their own capital into projects.
While this development raises the cost of capital for developers, it can help instill discipline in a notoriously cyclical industry and be positive for the overall health of the multi-family sector.
The full article can be read here.
