Almost 65% of homes in the US are over 25 years old
With a majority of homes in the US needing updates, renovations, or repairs, conditions are ripe for lenders who focus on construction-to-permanent and renovation loans, according to a blog by Tim Landwehr and published by Land Gorilla, a provider of construction loan software and lending products.
In addition to the almost 65% of US homes being more than 25 years old, Landwehr also noted that interest rates are rising and housing inventory remains low. Additionally, 2017 saw a series of natural disasters that have displaced thousands of families.
Landwehr said lenders who focus on niche loan products and fulfillment capabilities have a better chance of standing out in the housing market. He admitted, however, that many lenders who lack the expertise to launch competitive products may face a challenge due to the complexities of residential construction lending.
“However, new services, vendors, and technologies have emerged to help lenders avoid many of the most common pitfalls: deficient budgets, under or over disbursements, project funding delays, and builder performance, just to name a few,” Landwehr wrote.
Lenders can align with industry partners who offer pre- and post-construction services and technologies to feel confident during the life of the loan.
The market for construction-to-permanent and renovation loans is expected to be supported by demographic trends over the next decade. Older homeowners are currently projected to account for more than three-quarters of the growth in this time. Gen-X homeowners entering their prime remodeling years are also keep remodeling and home improvement rates safe, Landwehr wrote. In addition, Baby Boomers are expected to continue driving spending gains in new construction and renovations over the next decade.
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