NAHB Fall Leadership Meetings: Observations & Opportunities
At the NAHB Fall Leadership Meetings in San Antonio earlier this month, multifamily developers gathered to get the latest news and forecasts, which were a bit positive. Construction costs seem to be leveling off. Increases in the cost of insurance—still a major challenge—seem to be moderating. Multifamily starts are down from their recent peak, and production is slowing, but occupancy remains strong nationally.
Still, the mood was tense. Access to capital – debt in particular – is a real problem. Banks, many holding loans under pressure from higher rates, are reluctant to make new loans. When they do, rates and fees are up, and leverage is way down. Alternate sources of debt are prohibitively expensive, and the leverage isn’t any better. The multifamily developers in San Antonio were feeling the stress, many having gone for some time without a closing.
FHA has always been countercyclical—available when other sources of debt are not.
At AGM, we have seen more new construction deals in the past several weeks. FHA-insured rates are much better than bank rates, and while loans are constrained by debt coverage, the leverage is better, too. The process takes longer than conventional financing, but there is plenty of liquidity in the market, and FHA loans are getting done all across the country.
Developers are, by definition and by their nature, creative. They move forward every day, finding new ways to solve problems. If you haven’t done an FHA-insured deal or if it has been a while, it may be time to consider it. It won’t relieve all of your stress, but it could get you moving in the right direction.
When you’re ready to talk about your next project, please schedule a call.
About AGM Financial Services, Inc. Family-owned with over 30 years of experience, AGM has closed over $10 billion in FHA-insured multifamily project loans nationwide. We underwrite, fund, and service all of our loans. Developers and owners can count on AGM to be accessible, transparent, consistent, and ready to lend. From new construction to substantial rehabilitation to acquisition and refinance — for both market-rate and affordable projects — we can get the deal done. To learn more about AGM, call 800.729.4266 or visit agmfinancial.com.
