I like to read Bill McBride's Calculated Risk blog. In his blog, he talks about a concept called the Home Sales Distressing Gap. You can read about it here, and look at the graph here. Basically, the graph compares the sales of new homes versus the sale of existing homes. Until recently, both graphs had a similar shape (but different magnitudes). Then the real estate bubble popped. Now, new home sales are very low because the market is still trying to clear excess inventory.With fewer new home sales, there is a lot of competition for the few new projects that are cropping up. Clearly, tough times for many in the construction industry - especially those who focus on new home construction. And we are seeing that in our business as well. Although demand for conventional factoring is increasing, demand for construction factoring has been stagnating.
But hopefully it's not all doom and gloom. Sooner or later, the inventory will clear our and builders will start to build. And with that, demand for construction invoice factoring will increase. Actually - here is some good news about a new mega project that is being discussed in Miami.
