Construction financing for new multifamily product was notoriously this year, but the outlook for next year is strong. According to Gabe Weinert, an SVP at Walker & Dunlop that recently closed a $109 million in construction financing for new multifamily builds in Southern California, 2018 may be a better year for construction financing. Softened regulations and strong demand for apartment rentals will continue to fuel lender appetite for multifamily deals, including new construction deals.

“I think that it is getting a little easier. Most banks have concentration issues where they have done too many construction loans, and they are worried about doing too many construction loans,” Weinert tells GlobeSt.com. “They have to diversify their real estate, but the people that are invested in real estate still very much want to be in construction an multifamily.”

The biggest driver of lender appetite for multifamily construction deals is the undersupply in the market. Multifamily is undersupplied in most markets, and in Los Angeles the supply issues have led to gross affordability issues. “There is still a huge demand for housing, and in general there isn't enough supply being delivered,” says Weinert. “All underwritings and deals that we see, there are usually increases in rents; although some people are giving concessions to get tenants in, but that isn't abnormal.”