I ran into this a month or so ago. Outside investors will not underwrite jumbo construction loans California since the state has been declared a declining market. I found a local bank willing to give me the loan but honestly the whole process scared me off. The property I was looking to buy is still way overpriced and construction costs are sky high. The market still has a long way to fall (especially in my neck of the beach) and as much as I’d love to build right now, I can’t justify the risk that the completed new construction could easily be worth 20% less than what I put into it in a couple of years.
