Developers Feeling The Pressure

Photo by Sasha Freemind on Unsplash

With luxury sales being the slowest in years developers are starting to sweat with billions of dollars in debt coming due. One tactic is to obtain short-term inventory loans to try and ride the wave to a better market although it can make matters worse due to the higher interest rate. The oversupply of high-end units, new state taxes, a drop in overseas buyers and renewed fears of a pied-à-terre tax suggest that debt collectors may come calling before new buyers do. Most construction loans have three-year terms plus two one-year extensions, according to bankers, so much of the $7.24 billion that developers borrowed in 2015 and 2016 will be coming due over the next two years.

If you're an investor it could be worthwhile purchasing a bulk number of units in the right building for a nice discount.

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