Condo lending will build in 2025

Condo lending will open next year, especially as rates come down. Demand will be stronger as workers return to cities where condos are more affordable and often more convenient. Underwriting will loosen as rates drop, which will be beneficial to borrowers. The biggest factor will be presales. The construction lending market for condos will be liquid, especially among the debt funds. Lenders want to see presales that support the underwritten sellout, and lenders will be leverage-sensitive due to the usage of borrower deposits in certain states, which creates additional leverage for the sponsors. There will also still be a need for condo inventory loans as developers need time to sell once they are built.