Financing eludes many homebuilders

If you're in the market for a house, good luck finding a model home.

Milt Flinn, the chief operating officer at Kitson Partners overseeing a luxury residential development in Naples called Talis Park, says he interviewed 45 homebuilders but only a dozen had the financial strength to build a speculative home for buyers to visit. “The lenders don't make capital available for specs,” he says.

Despite the resurgence of residential real estate, banks and other lenders are still leery of homebuilders. During the boom, builders built speculative homes for prospective buyers but they and their lenders got caught with unsold inventory when the market collapsed.

Flinn, the former president of residential sales for Lakewood Ranch, says Kitson has had to help arrange financing for homebuilders to build speculative homes that are ready for residents to move into immediately. “We're funding builder specs,” he told a group of real estate investors recently.

Some prospective homeowners aren't waiting around. Flinn says one future resident at Talis Park is building a 24,000-square-foot home on two lots.