The High(er) Cost Of Money May Slow Down The Start Of Approved Residential Developments

Over the past few years, thousands of potential new housing units have been proposed to be built in the City of Harrisonburg and Rockingham County.

Some of these new developments are under construction, but many are sitting idle as undeveloped land that is approved for a new housing development but with no clear indication of if or when construction might begin on those new homes.

One of the biggest potential limitations on when these new homes might be built is -- the high(er) cost of money -- current interest rates.  

Developers and builders are not going out to get traditional mortgages in order to build out these communities -- but they almost always do need to borrow money from a bank to start a new housing development.  That money goes towards infrastructure (roads, water, sewer, sidewalks) as well as towards the construction of the housing units -- all of which are bills that have to be paid before the first home is sold or rented.

So, will we see all of these thousands of proposed or approved new home developments be built over the next year or two?  Almost certainly not... and one of the biggest things holding back the development of these new communities is the current economic climate with high(er) interest rates across the board.

If/when interest rates start to decline, perhaps we'll then see some of or more of these new developments being built.