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What is the current and expected market size for commercial bridge loans in the US? What has it been historically?
Greetings! I understand that you are looking for data on historical, current, and projected market size for commercial bridge loans in the US. It is my pleasure to research this for you. The short answer is that the estimated 2016 market size for commercial bridge loans in the US was $2.467 trillion, growing at about 10% annually. Please continue below for a deep dive of my findings.
METHODOLOGY
In order to research this request, I began by searching for the current market size for commercial bridge loans. While executing this search, I utilized multiple search strings across the internet in general, as well as with respected financial leaders such as Bloomberg, Forbes, and the Wall Street Journal. Following this, I turned to calculating an estimated market size utilizing available data. I was able to come to these estimates by correlating the percentage of Hunt Mortgage Group's (a national bridge load leader) bridge loan closures, Hunt Mortgage Group's total value of commercial loans, and data from the Federal Reserve Bank for national commercial loans from 2012-2016. This data is supported by information from individual lenders stating the value of their commercial bridge loans.
HISTORICAL AND PRESENT MARKET SIZE AND GROWTH
Hunt Mortgage Group, a national leader in commercial bridge loans, posted $125 million in commercial bridge loan closures for the first half of 2016. This is roughly 10% of the firm's $1.2 billion in total commercial lending for the same time frame. They projected that this level of lending would continue through the end of 2016, bringing total 2016 closures to $250 million.
The Federal Reserve Bank of St. Louis provides us with historical data on total commercial loans for the United States. By taking 10% of the value of the total commercial loans closed in these years, we can estimate the US market size for commercial bridge loans.
Growth is calculated by subtracting the values of year 2 from year 1, and dividing the difference by year 1.
2012 to 2013 growth: 6%
2013 to 2014 growth: 11%
2014 to 2015 growth: 11%
2015 to 2016 growth: 10%
If the 10% growth rate holds steady into 2017, we should see approximately $2.71 trillion in commercial bridge closures in this year. In support of this sustained level of growth, both CBRE and California Bridge Lending point to a favorable market in 2017. CRBE points to the increased focus on infrastructure development in the Trump Administration as support for continued growth.
These growth numbers are supported by historical data showing an upswing in bridge loan closures beginning in 2010. Multifamily executive reported at that time, that BB&T Real Estate had closed $50 million in commercial bridge loans in 2009, and was planning to close at least $100 million in 2011.
These large numbers continue to this day, supporting not only the growth trends indicated above, but also the large total value of the market.
->A survey of recent deals closed by Kennedy Funding shows $9.43 million in funding for 2016, as a smaller lender.
With only four of the numerous lenders in this space accounting for almost $1 billion in commercial bridge lending activity, it is not difficult to see how this sector reaches the trillion dollar range.
CONCLUSION
To wrap it up, the commercial bridge loan market in the US was worth an estimated $2.467 trillion in 2016, and is growing at a rate of about 10%. This market is expected to continue level growth in 2017 with the Trump Administration's focus on improvements to infrastructure.