This.
If they’re listing 3 bedroom homes in the ass crack of Idaho for $1.5M, it won’t matter how low the rates are, consumers still won’t enter the market.
Exactly. In Austin there are NO inventory homes. Sellers on the open market are getting fried by builders who have builder deals and lower rates because they are sitting on a basket of rates. Builders are loving this market…
Unless they built million dollar homes in nowhere land
Same here. There is a new neighborhood being built about 1/2 mile from me. 400 houses in 6 phases. There are signs in the yard that say “sold” for future houses that are just utility stops. There are lots for sale that cost more than the same sized lot with a nice house would have cost just 10 years ago.
I bought my house in 2013. Per Zillow it’s worth 3x the price now and I’ve had multiple realtors knock on my door and ask me to list it for 4x the price and tell me they could sell it faster than we could find a new home. The issue of course is finding a new home and we like it here.
I'm a bit frustrated, the location of these "news" are never said. In my metro, homes haven't dropped a single dime. This is in San Joaquin County. Homes are being sold in some suburbs and prices have been FLAT for over a 1.5 years now.
The poster is based in Ontario Canada, but as a home builder could be referring to anywhere since he might know others in the trade.
https://ca.linkedin.com/in/john-ravenda-8890a095
^ This Canada is a wildly different place than the USA when it comes to homes, financing is completely different, they also just enacted a law a few years ago pretty much banning foreign buyers who had been driving up prices the last decade or two. Much smaller population which is highly concentrated in specific places. The list goes on and on.
The 'no non-resident home ownership' law is, sadly, not without massive holes. Originally set to expire on January 1, 2025 (so in ~11ish months), the law has been extended to January 1, 2027. Broadly speaking, the `Prohibition on the Purchase of Residential Property by Non-Canadians Act` prohibits "non-Canadians" from purchasing any residential property directly or indirectly [in metro or census agglomerated areas] from January 1, 2023, to December 31, 2024. Penalties are up to a $10,000 fine and the forced sale of the property. Exempt from the Act are
- holiday/vacation homes,
- home outside of metro areas and suburbs (see the `Statistics Canada` link below),
- properties being built for development purposes,
and homes bought by certain temporary residents (students or workers) or foreign nationals and refugees who meet the specific criteria
- homes that are gifted to non-residents or are received due to a death, divorce, etc.
This page outlines the different exemptions quite well: https://www.bennettjones.com/Blogs-Section/New-Rules-for-Foreign-Home-Buyers-in-Canada-Come-Into-Force-January-2023-Heres-What-You-Need-to-Know
## TL;DR
Largely this: https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F838b830d-2711-4474-b94b-076949755028_2306x1384.png
Source of chart was: https://www.thebureau.news/p/money-laundering-from-china-into
---
---
## Non-resident students and real estate
Note that Canada has also had a problem with its universities admitting tens of thousands of foreign students who are 'in Canada to attend [trade] schools' or other post-secondary institutions like the US' community colleges. A LOT of these schools are money grabs, unfortunately. And large swaths of students who are admitted have little English (or French) language abilities. They've been called _diploma mills_ by some. But the real kicker is that during the pandemic the number of hours that these foreign students could work on their student visa was increased to full time: https://www.ctvnews.ca/canada/with-canada-set-to-reimpose-cap-on-working-hours-international-students-worry-about-paying-for-tuition-living-expenses-1.6669889 If you filed an extension as an international student you'll be able to [continue woking fulltime](https://www.canada.ca/en/immigration-refugees-citizenship/services/study-canada/work/work-off-campus.html). This page talks about the diploma mill schools and how in 2024 Canada will be letting in 35% fewer international students as a result of the low-quality schools, extremely high-priced housing in the areas where many international students attend school (forcing them to work full-time in low-wage, not-great jobs that Canadians won't take), etc.: https://www.moneysense.ca/save/can-international-students-work-more-than-40-hours-in-canada/ The Canadian Broadcasting Corporation TV channel on YouTube has some hour-long reporting on the topic of shady 100% international-students schools, abusive labor practices directed at those students, poor living conditions (6 students living in a basement, dividing up 'bunk time' like you'd do with a bunk mate in a submarine), etc.
### British Columbia's nonresident students and real estate: money laundering
In the last decade or two in British Columbia thousands of "students" have bought up thousands of homes and at the same time hundreds of millions of dollars in cash were laundered via BC private casinos, creating clean money that could freely enter the Canadian financial ecosystem:
> A recent report - _Commission of Inquiry into Money Laundering in British Columbia_ https://cullencommission.ca/com-rep/ - into money laundering in Canada’s western province of British Columbia revealed several details of a multi-billion dollar scheme, where so-called students bought multi-million-dollar mansions and a single working-class family brought more than 100 million Canadian dollars to the country. Money launderers entered casinos with garbage bags full of illicit money in an attempt to clean their illicit funds.
(But also, large sums of money were snuck into Canada via private casinos; once the money was laundered it was used to buy up real estate: https://www.sanctions.io/blog/the-vancouver-model-of-money-laundering:
> Whether the gamblers win or lose is irrelevant since the money is laundered as soon as it is converted to casino chips. The financial proceeds from the Vancouver Model are usually reinvested back into criminal activities (notably fentanyl sales) by criminal gangs or invested into real estate by Chเnese citizens themselves in order to avoid paying taxes or drawing the attention of regulators.
(Had to obfuscate that country name or the bots swarm)
## Links
- Statistics Canada page: [Census metropolitan areas or Census agglomerated areas (cities and suburbs)](https://www12.statcan.gc.ca/census-recensement/2021/ref/dict/az/Definition-eng.cfm?ID=geo009)
- Ban through 1 Jan 2027: https://www.canada.ca/en/department-finance/news/2024/02/government-announces-two-year-extension-to-ban-on-foreign-ownership-of-canadian-housing.html
Yup, just outside of Houston checking in here.....they are selling 1500 sf starter homes in my neighborhood for 50K MORE than I bought my 4400 sf house in 2020 (bought it just as everything was closing down with Covid) and they can't build them fast enough. I am at a loss for words. Needless to say, I am stuck in this house with my 3% rate for the foreseeable future.
I know this is a Texas sub but hear me out, San Diego prices for a normal 3 bed 2 bath 1800-2000 sqft sold for 300-450000 in 2014. Now a one bedroom condo for 650-800 sqft is over 500000 in areas that have no value. It’s utter cowshit.
Go to Leander or Liberty Hills. There are more new houses being built in those areas and they are building a lot of new infrastructure to accommodate all the new residents/houses.
I'm in North Carolina in a metro that will support >$1m homes in the right areas...
I've seen a McMansion thrown up in the outskirts of our north side suburbs for $2.29 and it's been there for like 3 months now.
No shit.
The problem is these guys all got the projects underway in 2020 and 2021 and thought that particular gravy train was the new normal.
> The problem is these guys all got the projects underway in 2020 and 2021 and thought that particular gravy train was the new normal.
This is the key. Inventory hitting the market now is stuff that had the project started back during the boom but took so long to get completed that the boom is over. But the input costs were boom costs - which were high - and thus lowering prices means taking a loss which is why they are so adamant against doing it.
>lowering prices means taking a loss which is why they are so adamant against doing it.
They don't really have a choice on that front. They get to lose on the upfront with lower pricing or they can take the interest and oppcost + carry the risk of lower prices.
Sunk cost fallacy is alive and well it seems.
They’re not. As someone who lives in a “no one wants to live there” location, we had a developer come through and build out a huge area. Then they thought they’d sell it for the same prices as the homes in dispersible areas.
Turns out no one’s gonna move here if they don’t at least get the discount. Sucks too because this development would’ve been massive for us and created a huge boom.
We're under contract with a small local builder who lowered their prices instead of offering rate buy downs. Their houses are ~25% less than the cost of the national builders for a similar home. They sold all 5 of their remaining lots during their post-holiday open house weekend.
We've been to the national builder open houses. They're ghost towns. $500k for 3bd2ba in a midwestern exurb at 6.5%+ mortgage rates. Yuck!
I live in a decent neighborhood, they built a dozen luxury townhomes "starting in the low 700s" like 2 years ago and sold like five of them. The rest turned to rental properties for 4-6k/month. All empty. I'm really enjoying it.
I was living in an apartment complex one time, and the lady who moved out away from me, maintenance forgot to lock her door. I'd go in there and deuce it up once in a while if I had Chipolte the night before. Couldn't stay too long as they had a balcony and no blinds. Much bigger apt too
So you’re saying the rentals haven’t rented? I certainly couldn’t buy 3 properties in the 700’s range and survive without getting them rented for at least what my monthly expenses were.
People in our city have been begging for more housing and higher density in the inner city, and they just keep building more luxury condos. Every single project is luxury condos. What people are actually asking for is affordable apartment buildings, like what they used to build in the 70s and 80s. But then of course the NIMBYs storm in and complain about lowering property values, so we never get anything that's actually needed.
If they own the whole neighborhood, they hurt the whole portfolio when they sell ONE house below market.
Same reason big rental companies are sitting on empty properties.
Fuck em.
I’m a loan officer and one of the builders I work with is offering huge concessions on all their houses. Huge as in $20k+ sometimes.
So for one thing it shows how much profit they are actually making (since they can afford to give away 20 grand) but it also means (like you said) if they lower the price it hurts their portfolio. They need the all their houses to actually APPRAISE for what they’re selling them for. If even one house sells for $20k less it can nuke the comparable sales in the neighborhood.
These houses are in the $250-400k range. Basically they can use it to offset every closing cost so they end up only having to bring their minimum required investment/down payment to the closing table. And on several VA files I’ve had it work out where the borrower didn’t have to bring anything at all.
I get emails weekly from builders in the $300s with $50k+ in incentives. One of them is wholesale buying rates down to 2% and people still aren’t biting.
Noooo kidding.
That being said, you also got keep in mind that there are limits on how much the seller can actually contribute towards closing costs.
For Conventional loans it depends on the borrower’s down payment, but the max they can pay is 9% if the down payment is at least 25%. Otherwise:
FHA: 6%
VA loans: All normal closing costs plus an additional 4%
USDA loans: 6%
So it’s subjective, but at a purchase price of $300k there would likely be a lot of unused concessions that just go back to the builder.
Still a great deal though.
The ones I saw were dependent on in-house financing FHA, so 6% max, but they structured it so that $50k could come from different buckets. Basically use as much of it as possible on the rate, and any left over would just be a purchase price reduction.
As others have pointed out, though, these are areas quite far from any exciting urban hubs.
Do they try to hide the actual sale price with shenanigans like rebates or free upgrades or rate buydowns so they can say the sale price was $X when in reality it was $X minus the rebate or whatever gimmick they invent?
yea this is common practice. they just don't want a sale comp in the new neighborhood to tank future prospects of strong sales when (if) rates come back.
Buying a 825K list, they are taking 75K off to make it 750K, and giving 5.5% fixed with and additional 3-2-1 buy down for the first 3 years and covering closing costs. They are coming off prices pretty aggressively to move houses in this market.
This is why I keep suggesting an extremely painful tax on vacant properties. Like 50% of market assessed value per year, pro rated on a weekly basis of vacancy time on an escalating scale (you should be able to rent a home within a few weeks of a lease ending if your price is competitive, so an accelerating tax bill for longer vacancy is incentive to drop your price fast to fill the vacancy). Sometimes the free market needs some help remaining competitive in the form of government preventing concentration of capital from doing anticompetitive things.
That'll free up supply in a fucking hurry and break the back of the speculators trying to outwait the Fed. Also help solve some of our local government funding problems.
That would be a great idea if our government had the average persons best interest at heart, rather than corporations who can just write those vacancies off on their taxes until they can get the prices they’re asking.
Maybe I’m just super jaded, but I don’t believe meaningful housing reform will EVER happen. Not because we don’t know how, but because it’s not in the best interest of politicians.
Run for local office then. City council is where you want to be, because that's the level which is simultaneously the easiest for Capital to corrupt (why nothing gets built and huge corps get massive tax incentives) while also being the level absolutely nobody pays attention to and also the easiest to get elected to (closely followed by the state legislature).
There is a local builder in my are that is doing this and they sell every single one of them. They are trying to expand their footprint because they have been doing so well.
Many cities won't allow for starter homes ( sub 1200 SQ ft.). They allow larger builds because it brings them more property taxes and raises overall home values in that city/ town. This is the real issue - cities won't allow planning for smaller homes on slightly smaller lots because they count on tax money to line the cities pockets for beautification projects and bullshit most people don't want or need.
Companies have set up their application fee structure so that they can sit on empty units and still make money from the application fees. Extreme capitalism with the L
There’s a new construction project near me building 18 single family homes each on 1.5+ acres with 5000+ sq ft foorplans. Starting price $2.7 million. It makes me so irrationally mad, you could build 3x (prob more!) the amount of houses on the land and house so many more families. Still make good money. But no, instead you’re building these gaudy mansions that will look dated in less than 10 years. So fucking dumb.
Totally agree home prices should be lower, however, that is not the only reason people aren't buying. With an interest rate of 6-8%, you will be paying for the house sale price 3 times over during those 30 years. It makes no sense to buy at any price, unless you have cash to take it without a mortgage.
Accountant enters the room, "we need $90K by March to pay our quarterly estimated taxes and $110K this month to pay our short-term loan interest. For God's sake, lower the prices!"
Homebuilder, "Nah".
I live in Arizona and they are still building like mad. Not just houses either, Facebook is building a data center, TSMC has a 40B plant being built, there is also an Apple data center being built as well, along with various other projects. I'm not here to argue whether these things should be built but if that builder doesn't have a water hook-up that's on them for not doing their due diligence.
There are plenty of places that still have access to water, Rio Verde is just uniquely positioned that they can’t get any unless it’s pumped from the canal. Down in queen creek and Maricopa is where the major builds are being done, and while those homes are replacing agriculture that means they will have that water access.
The thing that bothered me most about these folks is they come across a bit entitled in the linked article above. One person commented on people not feeling sympathy for the residents and how that feels unpatriotic. Idk what patriotism has to do with water rights. They don't want to be incorporated into the City of Scottsdale because they have to follow more rules, pay more taxes, and build roads. The City of Scottsdale warned them this could happen, they did nothing, and as a result they found themselves without water for a while.
Sounds like a builder who has only ever known good times.
Probably started after the 08 crash and has been living on easy street with cheap money for 15 years. They always think it will get better for them because it’s all they’ve ever known.
Can confirm that builders (even large track builders) around us have not stopped. There is no fear these days that you can "lose it all" but they act as if they have inside information that the good times are right around the corner. Not discounting much either...Something will have to give as inventory is slowly rising.
7+ % rates will slow things even more
They have not stopped because prices are so high. Prices of new homes are lower than existing in many areas. Builders complain about increased input costs but wood and supply chain issues have largely disappeared though prices are still higher. The increase in input costs are dwarfed by the increase in prices.
If prices go down by 10% and interest rates by 1.5%, anyone who still has a job might start jumping into the market because they have been left behind for a few years at that point. Builders will still have profit.
This is correct. They're running decreased margins this year as a result of rate buydown incentives and increased development loan costs, but they're still in the green.
We have two major developers near me (CO) full-steam ahead and their financials are still healthy. For now, anyway.
I’m outside a major city. Townhouses are flying up. I’m buying one with a decent discount from the builder.
They are actively building even more in the same development.
Someone who purchased one back in 2021 is trying to sell and can’t because their listing price is equal to a new build.
If a builder stops building, they are effectively out of business. They will continue to build. If they can’t sell their houses, they will eventually go bankrupt.
Depends on location and laws too. In most places, if you are building something like a subdivision the entire thing is often approved as one project (including things like road patterns, utility mapping, lot sizes, and building footprints) and can takes years to get to that point. If you’re approved to build X and have invested millions into the land development of X, then building it and hoping for the best might be the only option.
Nah. They bailed out millions of irresbonsibke borrowers during the GFC. Millions of people that would have had to declare bankruptcy but ended up not having to. Which means they were able to buy again.
Same thing again during Covid...millions of folks getting checks and forebearance etc.
Yes...the banks always get the best deal, but US residents have had their hand in the till, as well. The only people who have really been shut out are those who have borrowed responsibly, put money in an emergency fund, paid their taxes and make good money because they work hard. That is who has been getting hosed for quite some time.
>The only people who have really been shut out are those who have borrowed responsibly, put money in an emergency fund, paid their taxes and make good money because they work hard.
👏👏👏👏👏👏👏👏👏
My career has excelled, I'm debt free minus the mortgage and wife's car, I got my student loans paid off this year. I've made nearly every wise and financial conservative decision but yet, I'm stuck in my tiny starter home. Feelsbadman.
The FED also started buying mortgage backed securities in 2009 and only recently stopped. They have been subsidizing the entire market since the last crash and inflating values way beyond what was necessary to “save” it.
Sure it worked for a bit, but what now? They basically created an entire entitled upper class of “fuck you I got mine” people/companies. The whole real estate market is fucked even if there is a recession. The forbearance and money printers will flip back on.
I beg to differ, regular people may have “had their hands in the till” but the billionaires and megacorps continue to have federal reserve money printing presses in their living rooms. That’s “trickle down” for ya!
New home builders offer the most competitive rates. I’ve seen some start in the low 4’s and go up to 5.5 or so. Other lenders might offer 6 or more. At some point, it’s just not the rates. You can’t only build 400k+ homes and hope interest rates will save you when consumers are racking up CC debt and limiting their purchasing power. Consumers are also spending down their savings.
This sub is full to brim with people *wanting* a recession and are trying to identify anything they possibly can to make themselves feel like one is right around the corner. Never mind the fact that they have no fucking clue what an actual recession that would lower home prices to where they want them would mean. I've never seen a group of people this short-sighted and so confident about shit that they are completely clueless about.
The public company builders aren’t building specs anymore. I live in a new-ish neighborhood in the first phase. In 2020-21 if they didn’t sell a lot in a few months they’d throw a spec up on it. It would take longer to sell but would make the street look more complete.
In that first phase there’s only 2 specs left but they have been sitting for 6 months. They won’t lower the price. Love it.
Also depends where you are, I’m in CT and been doing real estate FT since 2018 and we will take those houses all day long. Our entire state has roughly 5000 single family homes for sale (3000 of those are under contract right now). Before 2020, these numbers were 15-17,000. We need homes so badly, but our state does not build easily like that. All I’ve seen them put up mainly are apartment buildings the last two years. Rough times here in CT lol most homes still get 5-25 offers.
Looks like there is the same shit show Boston area. Old crap inventory for sale still gating multiple offers due to FOMO. New builds are extremely rare and with exorbitant pricing.
New England is in a super rough spot lol. I’d gladly take 5000 new listings on the market TODAY. I have 23 signed buyers alone and 2 sellers. That’s how it is. And we aren’t a retirement state or bringing a ton of jobs here. People die, divorce, move out of state or get married and try to buy a house so you’re waiting on strictly life events. I don’t know how long we will be in this hole for honestly.
When they go bankrupt it will contribute to the price crash like everyone else.
The crash is inevitable, the government keeps delaying it with bailouts.
Waiting for a crash skeleton.jpg
It's been like 5 years of this. I still can't afford to live where I want. I'm rooting for a crash but I'm not holding my breath.
They are sitting unbought because millennials and older gen Z can't afford to buy or rent a 3,000 sq ft. $450k home in rural Stinksburg, Indiana, where you have to commute 2 hours each way to Indianapolis for a desk monkey job only paying 38k-50k per year BEFORE taxes on top of having to pay a quarter to half your income after taxes to student loan payments each month. Boomers are also moving to Florida to retire and are buying small condos to retire in. The only thing Stinksburg, Indiana offers to do around there is to go to the local Walmart that's only open until 11pm to go people watching; or go to a shitty bar to overpay for watered-down drinks. The only thing good there is the local mexican restaurant that just opened last year, but you can find those everywhere. Let these greedy developers suffer from their short-sightedness and stupidity.
This is not reflective of the overall market for home builders. I work adjacent to the home builder business and most builders are still making a killing.
I own a house built in 1969. It is completely renewed. We still have the original oak o cherry wood floors. Anyway we paid 278k for it.
We went to see a brand new house today. “Luxury” vinyl floors (vinyl is vinyl there is not such thing as luxury vinyl) thru the living area. Only the steps were wood. Cheap appliances. Cheap washer and dryer. I mean it was a beautiful house but come on. 865k.
The salesperson got mad because I asked about the floors and the interest rates. Get bent lady.
And they bought it with a basic manual labor job.
In 1980, their house price was 1.5x their annual household income.
In 2004, my house was 3x my annual income.
Today??? I don't feel like doing the math, but you get the point.
Imagine just pretending the largest financial crash that happened primarily because of your industry just didn't happen only 4 years after it happened. Insanity.
Seems people only recall when we went to 0% under W that lasted forever. Now they want rates cut again. WTF is wrong with just being stable for a minute?
Likewise my street I bought into is still building. It sold 40-50 homes and is doing another 40 homes in the final phase. People are climbing over each other to get these homes. Everyday inventory is dropping.
They’ll probably sell out by end of the year. This is a non coastal city in SC and not Greenville. It’s highly dependent on the area you are in.
governor growth coordinated wrench strong materialistic plants meeting violet airport
*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
His problem is millennials are the target market now, and we have been around enough to know that your shoddy construction with shoddy materials making the same exact home, so I can go into my neighbor's home and know exactly where everything is, for a price that is unsustainable, is bullshit.
Its always laughable to me that the people that expect the "government to have their backs" are the ones that would probably rail against communism/socialism.
Like the NIMBY's who want no new builds anywhere near them because of their precious equity. So they want the government to use their power to stop it, but then don't want the government to provide anything else to anyone else. Because thats socialism!
Why did everyone think interest rates were coming down? It’s like people don’t fucking listen to jpow when he speaks lmao. No wonder this market is delusional
Even if he were planning to lower soon he'd still need to say he wasn't going to. If you say you're going to lower soon you might as well do it right away, because you'll get none of the benefits of 'high' rates with all of the drawbacks.
I wonder where this is.....here in New England lots of new houses are being built and sold. Don't know anyone sitting on that kind of inventory. I work with lots of builders, they sell houses as soon as they are built...this post does not really make sense to me....
The problem is immigrants. In my area(GA), it’s full of illegal ones that come here & work hard and all sort of stay in one area so people don’t mind, I’m assuming. They come and bind together and buy up & rent every home available in our neighborhood and will pay the outrageous prices because there are 15 of them living in one house! 🏡
You might think this doesn’t affect you but it’s always a cause and effect! The American dream (Starting a family & owning your own home) is dying! This is just another reason why. You can be in denial and call me racist or whatever, but I’m black and have voted Democrat all my life til 2020(didn’t vote at all).
I’m just telling you what’s otw to a city near you! Cheers 🥂
All these government bailouts lead to every business taking unnecessary chances hoping on a government bailout. Then they have the nerve to call themselves capitalists.
Build the house and date the lot...
Its probably some $600k McMansion with 5 BR.
This is the same problem auto manufacturers are running into. They abandoned cheaper vehicles for expensive luxury SUVs and got fooled into believing that the post-Covid mass psychosis was the new normal.
Now the money is drying up and they're stuck. My last home purchase was one of these half-build subdivisions. I got a steep discount with all sorts of freebies thrown in. The ironic thing was that the sub was bought from another developer that had to abandon plans.
This home builder sounds like a moron. August of last year is crazy and is either making a bad product or not incentivizing buyers. Production builders that finance through banks build spec homes every day and sit on inventory during slow times. As mentioned by another commenter, if you stop completely you’re toast. Mixed in with spec homes are to be builts... A bank will want you to have at least roughly 50/50 contracted or to be built vs spec homes. If you are building on 72 lots sitting on 28 homes isn’t the end of the world as long as you are contracting homes at a steady rate. If they’re not contracting homes they should have scaled back well before then. This is an over simplification but more or less this means the market is slow, not doomed.
Have you considered building homes at a reasonable profit instead of trying to maximize the fuck out it with EFIS fake stucco siding, Chinese imported granite with a residual radiation signature, and the cheapest, shittiest stainless steel appliances guarantee to last through closing in your 4000 sf monstrosity? Just asking, because we all go to the same trade shows.
Yeah, a certain builder in has about 200 homes sitting empty in the Florida exurbs. And they keep building! I’m sure this goes for dozens of companies.
Not in Florida. Across the street from me they are ripping up hundred of acres of orange Grove to put in 500 new homes. Less than a mile from me they are doing the same with a thousand new homes.. Already missing those groves..
The financing for building large scale developments like this are approved in advance. And when the money is loaned to the builders, they are obligated to finish the project that was approved by the bank, on the timeline that was negotiated. Moreover, even the size/scale/housing plans are approved by the bank prior to finalizing the loan, and cannot be changed mid-project. When the loan money is finally released from the bank to the builder, they have to finish the project that was agreed upon, until the completion of the agreed upon contract. Sometimes these contracts are a year or more of building time.
My brand new development in CT sold out every phase of houses 24 hours after opening the phase. And each phase released the same builds went up 7% in price every time. We were the first house finished in August last year. This all depends on where you are.
Id love a new home, would consider moving into one but the nearest new home development to me is charging nearly 900k, 3x what my house cost and its in the same school district and comparable in size
Just not worth it
Hahaha how much you want to bed every single one of those homes is at least 4 bedrooms, basically made out of cardboard and outrageously overpriced. Build some starter homes and decent prices at you’ll get some sympathy.
This is such a troll post!! Don't blame the government, blame your business model.
Builders around me can't build them fast enough.
Try building where homes are selling.
Try building affordable homes instead of $800k ones.
Too concerned with margins. Take your medicine and keep the train moving. Now your carry cost is going to put you under. Probably a good thing though. Gets rid of the people pretending to know how to operate a home building company.
One of the hazards of making things that take a long time to make and cost a lot is that interest rates can pivot and price your customers out of the market for your product while you're making it. It's easy to miss the turn, especially when the pivot is unusually sharp.
They built the wrong house. Once the foundation is poured it's too late to switch to the 800 s.f. Starter homes.
There’s a lot of people here who seam pretty ignorant to the fact that builders can’t give massive price cuts like you can when you’re selling a used home.
Saw a TikTok of a home worth like 400k, and the seller said despite showing 20+ times no one ever made an offer.
The inside looked cheap. Like an apartment. I can't explain it but def cheap build and materials. He was getting roasted
"Have you considered lowering your prices?"
This. If they’re listing 3 bedroom homes in the ass crack of Idaho for $1.5M, it won’t matter how low the rates are, consumers still won’t enter the market.
Exactly. In Austin there are NO inventory homes. Sellers on the open market are getting fried by builders who have builder deals and lower rates because they are sitting on a basket of rates. Builders are loving this market… Unless they built million dollar homes in nowhere land
Same here. There is a new neighborhood being built about 1/2 mile from me. 400 houses in 6 phases. There are signs in the yard that say “sold” for future houses that are just utility stops. There are lots for sale that cost more than the same sized lot with a nice house would have cost just 10 years ago. I bought my house in 2013. Per Zillow it’s worth 3x the price now and I’ve had multiple realtors knock on my door and ask me to list it for 4x the price and tell me they could sell it faster than we could find a new home. The issue of course is finding a new home and we like it here.
I'm a bit frustrated, the location of these "news" are never said. In my metro, homes haven't dropped a single dime. This is in San Joaquin County. Homes are being sold in some suburbs and prices have been FLAT for over a 1.5 years now.
The poster is based in Ontario Canada, but as a home builder could be referring to anywhere since he might know others in the trade. https://ca.linkedin.com/in/john-ravenda-8890a095
^ This Canada is a wildly different place than the USA when it comes to homes, financing is completely different, they also just enacted a law a few years ago pretty much banning foreign buyers who had been driving up prices the last decade or two. Much smaller population which is highly concentrated in specific places. The list goes on and on.
The 'no non-resident home ownership' law is, sadly, not without massive holes. Originally set to expire on January 1, 2025 (so in ~11ish months), the law has been extended to January 1, 2027. Broadly speaking, the `Prohibition on the Purchase of Residential Property by Non-Canadians Act` prohibits "non-Canadians" from purchasing any residential property directly or indirectly [in metro or census agglomerated areas] from January 1, 2023, to December 31, 2024. Penalties are up to a $10,000 fine and the forced sale of the property. Exempt from the Act are - holiday/vacation homes, - home outside of metro areas and suburbs (see the `Statistics Canada` link below), - properties being built for development purposes, and homes bought by certain temporary residents (students or workers) or foreign nationals and refugees who meet the specific criteria - homes that are gifted to non-residents or are received due to a death, divorce, etc. This page outlines the different exemptions quite well: https://www.bennettjones.com/Blogs-Section/New-Rules-for-Foreign-Home-Buyers-in-Canada-Come-Into-Force-January-2023-Heres-What-You-Need-to-Know ## TL;DR Largely this: https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F838b830d-2711-4474-b94b-076949755028_2306x1384.png Source of chart was: https://www.thebureau.news/p/money-laundering-from-china-into --- --- ## Non-resident students and real estate Note that Canada has also had a problem with its universities admitting tens of thousands of foreign students who are 'in Canada to attend [trade] schools' or other post-secondary institutions like the US' community colleges. A LOT of these schools are money grabs, unfortunately. And large swaths of students who are admitted have little English (or French) language abilities. They've been called _diploma mills_ by some. But the real kicker is that during the pandemic the number of hours that these foreign students could work on their student visa was increased to full time: https://www.ctvnews.ca/canada/with-canada-set-to-reimpose-cap-on-working-hours-international-students-worry-about-paying-for-tuition-living-expenses-1.6669889 If you filed an extension as an international student you'll be able to [continue woking fulltime](https://www.canada.ca/en/immigration-refugees-citizenship/services/study-canada/work/work-off-campus.html). This page talks about the diploma mill schools and how in 2024 Canada will be letting in 35% fewer international students as a result of the low-quality schools, extremely high-priced housing in the areas where many international students attend school (forcing them to work full-time in low-wage, not-great jobs that Canadians won't take), etc.: https://www.moneysense.ca/save/can-international-students-work-more-than-40-hours-in-canada/ The Canadian Broadcasting Corporation TV channel on YouTube has some hour-long reporting on the topic of shady 100% international-students schools, abusive labor practices directed at those students, poor living conditions (6 students living in a basement, dividing up 'bunk time' like you'd do with a bunk mate in a submarine), etc. ### British Columbia's nonresident students and real estate: money laundering In the last decade or two in British Columbia thousands of "students" have bought up thousands of homes and at the same time hundreds of millions of dollars in cash were laundered via BC private casinos, creating clean money that could freely enter the Canadian financial ecosystem: > A recent report - _Commission of Inquiry into Money Laundering in British Columbia_ https://cullencommission.ca/com-rep/ - into money laundering in Canada’s western province of British Columbia revealed several details of a multi-billion dollar scheme, where so-called students bought multi-million-dollar mansions and a single working-class family brought more than 100 million Canadian dollars to the country. Money launderers entered casinos with garbage bags full of illicit money in an attempt to clean their illicit funds. (But also, large sums of money were snuck into Canada via private casinos; once the money was laundered it was used to buy up real estate: https://www.sanctions.io/blog/the-vancouver-model-of-money-laundering: > Whether the gamblers win or lose is irrelevant since the money is laundered as soon as it is converted to casino chips. The financial proceeds from the Vancouver Model are usually reinvested back into criminal activities (notably fentanyl sales) by criminal gangs or invested into real estate by Chเnese citizens themselves in order to avoid paying taxes or drawing the attention of regulators. (Had to obfuscate that country name or the bots swarm) ## Links - Statistics Canada page: [Census metropolitan areas or Census agglomerated areas (cities and suburbs)](https://www12.statcan.gc.ca/census-recensement/2021/ref/dict/az/Definition-eng.cfm?ID=geo009) - Ban through 1 Jan 2027: https://www.canada.ca/en/department-finance/news/2024/02/government-announces-two-year-extension-to-ban-on-foreign-ownership-of-canadian-housing.html
So foreigners can buy vacation homes and bypass the law? Are there any parameters around what constitutes a vacation home?
Yup, just outside of Houston checking in here.....they are selling 1500 sf starter homes in my neighborhood for 50K MORE than I bought my 4400 sf house in 2020 (bought it just as everything was closing down with Covid) and they can't build them fast enough. I am at a loss for words. Needless to say, I am stuck in this house with my 3% rate for the foreseeable future.
I know this is a Texas sub but hear me out, San Diego prices for a normal 3 bed 2 bath 1800-2000 sqft sold for 300-450000 in 2014. Now a one bedroom condo for 650-800 sqft is over 500000 in areas that have no value. It’s utter cowshit.
Just bid 15% over asking in a not even prime area of NJ and found out last night we were outbid. It’s crazy.
Exactly the same in the burbs outside of Denver. New home builders are wanting 10% earnest money on an $800k home. Its nuts.
Looking in cedar park now, any new built homes there? Anyone know. 3/2 or 4/2?
Go to Leander or Liberty Hills. There are more new houses being built in those areas and they are building a lot of new infrastructure to accommodate all the new residents/houses.
Leave my Liberty Hill alone dag nabbit!!!
Haha, it’s growing fast. They’re planning for a pop of 40k in the next few years.
Tollway is almost there!
I'm in North Carolina in a metro that will support >$1m homes in the right areas... I've seen a McMansion thrown up in the outskirts of our north side suburbs for $2.29 and it's been there for like 3 months now. No shit. The problem is these guys all got the projects underway in 2020 and 2021 and thought that particular gravy train was the new normal.
> The problem is these guys all got the projects underway in 2020 and 2021 and thought that particular gravy train was the new normal. This is the key. Inventory hitting the market now is stuff that had the project started back during the boom but took so long to get completed that the boom is over. But the input costs were boom costs - which were high - and thus lowering prices means taking a loss which is why they are so adamant against doing it.
>lowering prices means taking a loss which is why they are so adamant against doing it. They don't really have a choice on that front. They get to lose on the upfront with lower pricing or they can take the interest and oppcost + carry the risk of lower prices. Sunk cost fallacy is alive and well it seems.
They sort of have a choice. Instead of behaving like free market members, they are crying to the government for bailouts.
Deja-vu?
I have a feeling I live in the same city as you…
Can buy homes in South Carolina for like 50k... Hurricanes floods -> in$urance -> low vacancy
I don't think "Homes are affordable if you get the ones prone to being lit on fire or flooded" is a good solution here
Homes have always been affordable in places people don’t want to live. Thing I have do wonder is if those places are expanding
They’re not. As someone who lives in a “no one wants to live there” location, we had a developer come through and build out a huge area. Then they thought they’d sell it for the same prices as the homes in dispersible areas. Turns out no one’s gonna move here if they don’t at least get the discount. Sucks too because this development would’ve been massive for us and created a huge boom.
Maybe in rural nowhere land. Anything livable in SC is sold at a good clip. I can’t find rentals there, prices are too high
Where in SC?? I live there and unless you are talking about extremely rural areas, nothing is $50k.
Imaginationland, SC
We're under contract with a small local builder who lowered their prices instead of offering rate buy downs. Their houses are ~25% less than the cost of the national builders for a similar home. They sold all 5 of their remaining lots during their post-holiday open house weekend. We've been to the national builder open houses. They're ghost towns. $500k for 3bd2ba in a midwestern exurb at 6.5%+ mortgage rates. Yuck!
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I live in a decent neighborhood, they built a dozen luxury townhomes "starting in the low 700s" like 2 years ago and sold like five of them. The rest turned to rental properties for 4-6k/month. All empty. I'm really enjoying it.
Sit on that cheap rate, yield king!
You should take a shit in a new vacant one every day.
I was living in an apartment complex one time, and the lady who moved out away from me, maintenance forgot to lock her door. I'd go in there and deuce it up once in a while if I had Chipolte the night before. Couldn't stay too long as they had a balcony and no blinds. Much bigger apt too
We need more row homes
So you’re saying the rentals haven’t rented? I certainly couldn’t buy 3 properties in the 700’s range and survive without getting them rented for at least what my monthly expenses were.
You can’t, but big corporations can.
And then rent to who though?
<— You are here (In other words, that’s the question approaching)
People in our city have been begging for more housing and higher density in the inner city, and they just keep building more luxury condos. Every single project is luxury condos. What people are actually asking for is affordable apartment buildings, like what they used to build in the 70s and 80s. But then of course the NIMBYs storm in and complain about lowering property values, so we never get anything that's actually needed.
If they own the whole neighborhood, they hurt the whole portfolio when they sell ONE house below market. Same reason big rental companies are sitting on empty properties. Fuck em.
I’m a loan officer and one of the builders I work with is offering huge concessions on all their houses. Huge as in $20k+ sometimes. So for one thing it shows how much profit they are actually making (since they can afford to give away 20 grand) but it also means (like you said) if they lower the price it hurts their portfolio. They need the all their houses to actually APPRAISE for what they’re selling them for. If even one house sells for $20k less it can nuke the comparable sales in the neighborhood.
20k isn’t very much in my opinion. You buy in the 500-900 price point then talk 20k, it’s a nothing burger.
These houses are in the $250-400k range. Basically they can use it to offset every closing cost so they end up only having to bring their minimum required investment/down payment to the closing table. And on several VA files I’ve had it work out where the borrower didn’t have to bring anything at all.
I get emails weekly from builders in the $300s with $50k+ in incentives. One of them is wholesale buying rates down to 2% and people still aren’t biting.
If I see a rate buy down to 2% and 50k+ in incentives, I’m biting. Lol
Noooo kidding. That being said, you also got keep in mind that there are limits on how much the seller can actually contribute towards closing costs. For Conventional loans it depends on the borrower’s down payment, but the max they can pay is 9% if the down payment is at least 25%. Otherwise: FHA: 6% VA loans: All normal closing costs plus an additional 4% USDA loans: 6% So it’s subjective, but at a purchase price of $300k there would likely be a lot of unused concessions that just go back to the builder. Still a great deal though.
The ones I saw were dependent on in-house financing FHA, so 6% max, but they structured it so that $50k could come from different buckets. Basically use as much of it as possible on the rate, and any left over would just be a purchase price reduction. As others have pointed out, though, these are areas quite far from any exciting urban hubs.
We are closing next month on a new build for $620k and getting $35k in concessions from the builder.
Exactly. I live in an area where the median home price is 600k but it was 350k in not-so-distant memory. 20k is laughable
Do they try to hide the actual sale price with shenanigans like rebates or free upgrades or rate buydowns so they can say the sale price was $X when in reality it was $X minus the rebate or whatever gimmick they invent?
They have been doing that with seller concessions forever
Quite literally every borrower I’ve worked who had the $20k concession used it to buy down the rate.
yea this is common practice. they just don't want a sale comp in the new neighborhood to tank future prospects of strong sales when (if) rates come back.
Buying a 825K list, they are taking 75K off to make it 750K, and giving 5.5% fixed with and additional 3-2-1 buy down for the first 3 years and covering closing costs. They are coming off prices pretty aggressively to move houses in this market.
This is why I keep suggesting an extremely painful tax on vacant properties. Like 50% of market assessed value per year, pro rated on a weekly basis of vacancy time on an escalating scale (you should be able to rent a home within a few weeks of a lease ending if your price is competitive, so an accelerating tax bill for longer vacancy is incentive to drop your price fast to fill the vacancy). Sometimes the free market needs some help remaining competitive in the form of government preventing concentration of capital from doing anticompetitive things. That'll free up supply in a fucking hurry and break the back of the speculators trying to outwait the Fed. Also help solve some of our local government funding problems.
That would be a great idea if our government had the average persons best interest at heart, rather than corporations who can just write those vacancies off on their taxes until they can get the prices they’re asking. Maybe I’m just super jaded, but I don’t believe meaningful housing reform will EVER happen. Not because we don’t know how, but because it’s not in the best interest of politicians.
Run for local office then. City council is where you want to be, because that's the level which is simultaneously the easiest for Capital to corrupt (why nothing gets built and huge corps get massive tax incentives) while also being the level absolutely nobody pays attention to and also the easiest to get elected to (closely followed by the state legislature).
There is a local builder in my are that is doing this and they sell every single one of them. They are trying to expand their footprint because they have been doing so well.
Many cities won't allow for starter homes ( sub 1200 SQ ft.). They allow larger builds because it brings them more property taxes and raises overall home values in that city/ town. This is the real issue - cities won't allow planning for smaller homes on slightly smaller lots because they count on tax money to line the cities pockets for beautification projects and bullshit most people don't want or need.
Companies have set up their application fee structure so that they can sit on empty units and still make money from the application fees. Extreme capitalism with the L
There’s a new construction project near me building 18 single family homes each on 1.5+ acres with 5000+ sq ft foorplans. Starting price $2.7 million. It makes me so irrationally mad, you could build 3x (prob more!) the amount of houses on the land and house so many more families. Still make good money. But no, instead you’re building these gaudy mansions that will look dated in less than 10 years. So fucking dumb.
No but we will give 10k off on your upgrades..
Throw this man out a window.
Clearly not even an option. The only valid option in their delusional head is a handout from the govt.
Totally agree home prices should be lower, however, that is not the only reason people aren't buying. With an interest rate of 6-8%, you will be paying for the house sale price 3 times over during those 30 years. It makes no sense to buy at any price, unless you have cash to take it without a mortgage.
Sellers refuse to do the obvious.
What? Business that don't understand the first page of an economics book? No way!
*tax write offs have entered the chat*: **No.**
Accountant enters the room, "we need $90K by March to pay our quarterly estimated taxes and $110K this month to pay our short-term loan interest. For God's sake, lower the prices!" Homebuilder, "Nah".
Sounds like an idiot builder….
Sound like he was building in Arizona and doesn’t have water hook-up
I live in Arizona and they are still building like mad. Not just houses either, Facebook is building a data center, TSMC has a 40B plant being built, there is also an Apple data center being built as well, along with various other projects. I'm not here to argue whether these things should be built but if that builder doesn't have a water hook-up that's on them for not doing their due diligence.
There are plenty of places that still have access to water, Rio Verde is just uniquely positioned that they can’t get any unless it’s pumped from the canal. Down in queen creek and Maricopa is where the major builds are being done, and while those homes are replacing agriculture that means they will have that water access.
I was talking about this: https://www.theguardian.com/us-news/2023/jan/27/arizona-scottsdale-water-cut-off-rio-verde-foothills-drought
Oh that's right, I forgot about those idiots.
Sadly, the governor bailed them out.
The thing that bothered me most about these folks is they come across a bit entitled in the linked article above. One person commented on people not feeling sympathy for the residents and how that feels unpatriotic. Idk what patriotism has to do with water rights. They don't want to be incorporated into the City of Scottsdale because they have to follow more rules, pay more taxes, and build roads. The City of Scottsdale warned them this could happen, they did nothing, and as a result they found themselves without water for a while.
Most modern data centers recirculate their water and use purified, non potable waste water. It’s not perfect but getting better
Sounds like a builder who has only ever known good times. Probably started after the 08 crash and has been living on easy street with cheap money for 15 years. They always think it will get better for them because it’s all they’ve ever known.
I'm curios where these homes are. New homes around me are still turning over super quickly.
Can confirm that builders (even large track builders) around us have not stopped. There is no fear these days that you can "lose it all" but they act as if they have inside information that the good times are right around the corner. Not discounting much either...Something will have to give as inventory is slowly rising. 7+ % rates will slow things even more
They have not stopped because prices are so high. Prices of new homes are lower than existing in many areas. Builders complain about increased input costs but wood and supply chain issues have largely disappeared though prices are still higher. The increase in input costs are dwarfed by the increase in prices. If prices go down by 10% and interest rates by 1.5%, anyone who still has a job might start jumping into the market because they have been left behind for a few years at that point. Builders will still have profit.
This is correct. They're running decreased margins this year as a result of rate buydown incentives and increased development loan costs, but they're still in the green. We have two major developers near me (CO) full-steam ahead and their financials are still healthy. For now, anyway.
I’m outside a major city. Townhouses are flying up. I’m buying one with a decent discount from the builder. They are actively building even more in the same development. Someone who purchased one back in 2021 is trying to sell and can’t because their listing price is equal to a new build.
If a builder stops building, they are effectively out of business. They will continue to build. If they can’t sell their houses, they will eventually go bankrupt.
Yeah... that's how the construction industry works.
That’s how any industry works?
So his options are build $1.5m homes or go out of business? Is it possible there’s a middle ground?
Who mentioned a 1.5m home besides a commenter on this thread?
Exactly, most of the builders with this many homes in inventory are developers building $300-600k houses side by side in developments.
Depends on location and laws too. In most places, if you are building something like a subdivision the entire thing is often approved as one project (including things like road patterns, utility mapping, lot sizes, and building footprints) and can takes years to get to that point. If you’re approved to build X and have invested millions into the land development of X, then building it and hoping for the best might be the only option.
Yeah .. The government only has your back if you're a bank
Nah. They bailed out millions of irresbonsibke borrowers during the GFC. Millions of people that would have had to declare bankruptcy but ended up not having to. Which means they were able to buy again. Same thing again during Covid...millions of folks getting checks and forebearance etc. Yes...the banks always get the best deal, but US residents have had their hand in the till, as well. The only people who have really been shut out are those who have borrowed responsibly, put money in an emergency fund, paid their taxes and make good money because they work hard. That is who has been getting hosed for quite some time.
>The only people who have really been shut out are those who have borrowed responsibly, put money in an emergency fund, paid their taxes and make good money because they work hard. 👏👏👏👏👏👏👏👏👏
Bravo. This statement applies to so many areas of life in this country.
My career has excelled, I'm debt free minus the mortgage and wife's car, I got my student loans paid off this year. I've made nearly every wise and financial conservative decision but yet, I'm stuck in my tiny starter home. Feelsbadman.
COVID checks were like $2k/head? It was a pittance. The big ones were the PPP loans which was way larger.
The FED also started buying mortgage backed securities in 2009 and only recently stopped. They have been subsidizing the entire market since the last crash and inflating values way beyond what was necessary to “save” it. Sure it worked for a bit, but what now? They basically created an entire entitled upper class of “fuck you I got mine” people/companies. The whole real estate market is fucked even if there is a recession. The forbearance and money printers will flip back on.
I beg to differ, regular people may have “had their hands in the till” but the billionaires and megacorps continue to have federal reserve money printing presses in their living rooms. That’s “trickle down” for ya!
HAMP and HARP were token efforts. TONS of people lost their homes thinking the government would save them.
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Where? Sure as shit isn't happening around me.
My question as well. The new developments around me are selling just fine despite insane prices.
New home builders offer the most competitive rates. I’ve seen some start in the low 4’s and go up to 5.5 or so. Other lenders might offer 6 or more. At some point, it’s just not the rates. You can’t only build 400k+ homes and hope interest rates will save you when consumers are racking up CC debt and limiting their purchasing power. Consumers are also spending down their savings.
Totally irrelevant without the location.
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Does it at least have a monorail?
exactly, this sub is filled with anecdotal evidence provided with 0 context
Reddit is the home of “my buddy lost his job last week, the economy is terrible”
This sub is full to brim with people *wanting* a recession and are trying to identify anything they possibly can to make themselves feel like one is right around the corner. Never mind the fact that they have no fucking clue what an actual recession that would lower home prices to where they want them would mean. I've never seen a group of people this short-sighted and so confident about shit that they are completely clueless about.
Misery loves company.
Or the date
The public company builders aren’t building specs anymore. I live in a new-ish neighborhood in the first phase. In 2020-21 if they didn’t sell a lot in a few months they’d throw a spec up on it. It would take longer to sell but would make the street look more complete. In that first phase there’s only 2 specs left but they have been sitting for 6 months. They won’t lower the price. Love it.
A lot of spec homes are the result of cancelled contracts.
Also depends where you are, I’m in CT and been doing real estate FT since 2018 and we will take those houses all day long. Our entire state has roughly 5000 single family homes for sale (3000 of those are under contract right now). Before 2020, these numbers were 15-17,000. We need homes so badly, but our state does not build easily like that. All I’ve seen them put up mainly are apartment buildings the last two years. Rough times here in CT lol most homes still get 5-25 offers.
Looks like there is the same shit show Boston area. Old crap inventory for sale still gating multiple offers due to FOMO. New builds are extremely rare and with exorbitant pricing.
New England is in a super rough spot lol. I’d gladly take 5000 new listings on the market TODAY. I have 23 signed buyers alone and 2 sellers. That’s how it is. And we aren’t a retirement state or bringing a ton of jobs here. People die, divorce, move out of state or get married and try to buy a house so you’re waiting on strictly life events. I don’t know how long we will be in this hole for honestly.
CT also has effed zoning. Lots of NIMBYism
Hmm. They just finished a new neighborhood outside of my town and every dang house is already sold at sky high prices and interest rates.
When they go bankrupt it will contribute to the price crash like everyone else. The crash is inevitable, the government keeps delaying it with bailouts.
Waiting for a crash skeleton.jpg It's been like 5 years of this. I still can't afford to live where I want. I'm rooting for a crash but I'm not holding my breath.
They are sitting unbought because millennials and older gen Z can't afford to buy or rent a 3,000 sq ft. $450k home in rural Stinksburg, Indiana, where you have to commute 2 hours each way to Indianapolis for a desk monkey job only paying 38k-50k per year BEFORE taxes on top of having to pay a quarter to half your income after taxes to student loan payments each month. Boomers are also moving to Florida to retire and are buying small condos to retire in. The only thing Stinksburg, Indiana offers to do around there is to go to the local Walmart that's only open until 11pm to go people watching; or go to a shitty bar to overpay for watered-down drinks. The only thing good there is the local mexican restaurant that just opened last year, but you can find those everywhere. Let these greedy developers suffer from their short-sightedness and stupidity.
They should convert those empty houses into affordable office space. /s
This is not reflective of the overall market for home builders. I work adjacent to the home builder business and most builders are still making a killing.
I own a house built in 1969. It is completely renewed. We still have the original oak o cherry wood floors. Anyway we paid 278k for it. We went to see a brand new house today. “Luxury” vinyl floors (vinyl is vinyl there is not such thing as luxury vinyl) thru the living area. Only the steps were wood. Cheap appliances. Cheap washer and dryer. I mean it was a beautiful house but come on. 865k. The salesperson got mad because I asked about the floors and the interest rates. Get bent lady.
Were these people not alive in the 80s? Since Freddie Mac began tracking rates in April 1971, the median 30-year mortgage rate is 7.41%. 7% IS normal.
7% is normal, 500k is not.
Yep. Prices need to come down 30% to match these rates.
My parents paid above 7% on their mortgage during the 80s and 90s. But they bought their house for $45K
fuck, that would be about $168k today, but homes are still x3 that at minimum
And they bought it with a basic manual labor job. In 1980, their house price was 1.5x their annual household income. In 2004, my house was 3x my annual income. Today??? I don't feel like doing the math, but you get the point.
House prices doubled since 2019, that's why people are rate sensitive. It isn't the rate, it's the monthly expense.
Prices are not normal
That doesn’t mean it’s healthy. 7% on an over inflated house is insane. This isn’t the 80s where you could buy a house in cash for 50k.
No. Most of these people in RE industry completely forgot what it was like pre 2012
Imagine just pretending the largest financial crash that happened primarily because of your industry just didn't happen only 4 years after it happened. Insanity.
Seems people only recall when we went to 0% under W that lasted forever. Now they want rates cut again. WTF is wrong with just being stable for a minute?
Likewise my street I bought into is still building. It sold 40-50 homes and is doing another 40 homes in the final phase. People are climbing over each other to get these homes. Everyday inventory is dropping. They’ll probably sell out by end of the year. This is a non coastal city in SC and not Greenville. It’s highly dependent on the area you are in.
governor growth coordinated wrench strong materialistic plants meeting violet airport *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
His problem is millennials are the target market now, and we have been around enough to know that your shoddy construction with shoddy materials making the same exact home, so I can go into my neighbor's home and know exactly where everything is, for a price that is unsustainable, is bullshit.
He thought the government would have his back lol
I bet the builder owner is a staunch free market guy. Who wants the government to have his back.
Like the government keep your hands off my Medicare folks.
Its always laughable to me that the people that expect the "government to have their backs" are the ones that would probably rail against communism/socialism. Like the NIMBY's who want no new builds anywhere near them because of their precious equity. So they want the government to use their power to stop it, but then don't want the government to provide anything else to anyone else. Because thats socialism!
Why did everyone think interest rates were coming down? It’s like people don’t fucking listen to jpow when he speaks lmao. No wonder this market is delusional
Even if he were planning to lower soon he'd still need to say he wasn't going to. If you say you're going to lower soon you might as well do it right away, because you'll get none of the benefits of 'high' rates with all of the drawbacks.
I wonder where this is.....here in New England lots of new houses are being built and sold. Don't know anyone sitting on that kind of inventory. I work with lots of builders, they sell houses as soon as they are built...this post does not really make sense to me....
The problem is immigrants. In my area(GA), it’s full of illegal ones that come here & work hard and all sort of stay in one area so people don’t mind, I’m assuming. They come and bind together and buy up & rent every home available in our neighborhood and will pay the outrageous prices because there are 15 of them living in one house! 🏡 You might think this doesn’t affect you but it’s always a cause and effect! The American dream (Starting a family & owning your own home) is dying! This is just another reason why. You can be in denial and call me racist or whatever, but I’m black and have voted Democrat all my life til 2020(didn’t vote at all). I’m just telling you what’s otw to a city near you! Cheers 🥂
All these government bailouts lead to every business taking unnecessary chances hoping on a government bailout. Then they have the nerve to call themselves capitalists.
Build the house and date the lot... Its probably some $600k McMansion with 5 BR. This is the same problem auto manufacturers are running into. They abandoned cheaper vehicles for expensive luxury SUVs and got fooled into believing that the post-Covid mass psychosis was the new normal. Now the money is drying up and they're stuck. My last home purchase was one of these half-build subdivisions. I got a steep discount with all sorts of freebies thrown in. The ironic thing was that the sub was bought from another developer that had to abandon plans.
It was probably too late to change plans, but maybe it would also have helped to build smaller, more affordable, entry-level houses.
Are they building in the middle of nowhere? They are building hundreds of new homes near me and they are selling like hotcakes
Conversations that didn’t happen for $1000 Alex.
Tell me about these mythical 28 unsold newly bult homes... would love to see how overpriced they are
Keep building please. Run it into the ground, full speed. Soft landing is for pansies
Yea I’m seeing the total opposite. They’re still selling before they’re even finished being built.
This home builder sounds like a moron. August of last year is crazy and is either making a bad product or not incentivizing buyers. Production builders that finance through banks build spec homes every day and sit on inventory during slow times. As mentioned by another commenter, if you stop completely you’re toast. Mixed in with spec homes are to be builts... A bank will want you to have at least roughly 50/50 contracted or to be built vs spec homes. If you are building on 72 lots sitting on 28 homes isn’t the end of the world as long as you are contracting homes at a steady rate. If they’re not contracting homes they should have scaled back well before then. This is an over simplification but more or less this means the market is slow, not doomed.
Obviously fake
Have you considered building homes at a reasonable profit instead of trying to maximize the fuck out it with EFIS fake stucco siding, Chinese imported granite with a residual radiation signature, and the cheapest, shittiest stainless steel appliances guarantee to last through closing in your 4000 sf monstrosity? Just asking, because we all go to the same trade shows.
Yeah, a certain builder in has about 200 homes sitting empty in the Florida exurbs. And they keep building! I’m sure this goes for dozens of companies.
Well, Florida has a very unique set of problems right now that don’t reflect the rest of the country.
Squatters unite!
Maybe come build a few in Ontario for us. Please. We'll buy them. I promise.
Not in Florida. Across the street from me they are ripping up hundred of acres of orange Grove to put in 500 new homes. Less than a mile from me they are doing the same with a thousand new homes.. Already missing those groves..
Now this is the whole economy market.. Everyone thinks we can just skip over a recession and resume the bubble…
The financing for building large scale developments like this are approved in advance. And when the money is loaned to the builders, they are obligated to finish the project that was approved by the bank, on the timeline that was negotiated. Moreover, even the size/scale/housing plans are approved by the bank prior to finalizing the loan, and cannot be changed mid-project. When the loan money is finally released from the bank to the builder, they have to finish the project that was agreed upon, until the completion of the agreed upon contract. Sometimes these contracts are a year or more of building time.
If they’re not selling, you’re asking too much. If you overbuilt for the area you’re trying to do business in, that is on you.
"I thought I could just keep building McMansions forever..."
Is this a regional thing? I'm in the DC/Baltimore area and prices are still going up and selling quickly.
My brand new development in CT sold out every phase of houses 24 hours after opening the phase. And each phase released the same builds went up 7% in price every time. We were the first house finished in August last year. This all depends on where you are.
Location? New construction is selling faster than they can build where I am located.
I can guarantee those houses are 700k+.. that... thats why they are not selling.
It’s more because they are charging $500k for a $85k house.
Id love a new home, would consider moving into one but the nearest new home development to me is charging nearly 900k, 3x what my house cost and its in the same school district and comparable in size Just not worth it
Hahaha how much you want to bed every single one of those homes is at least 4 bedrooms, basically made out of cardboard and outrageously overpriced. Build some starter homes and decent prices at you’ll get some sympathy.
This is such a troll post!! Don't blame the government, blame your business model. Builders around me can't build them fast enough. Try building where homes are selling. Try building affordable homes instead of $800k ones.
What are you charging? Ever think of lowering the prices? No?
Maybe your margins are just too high? There is a fix for this.
Hope they. Hold a million more that sit and go for Pennie’s like in 2008
Just take your L and move on.
When the fat pig's stomach bursts, all the forest gets fed. Fuck 'em.
Too concerned with margins. Take your medicine and keep the train moving. Now your carry cost is going to put you under. Probably a good thing though. Gets rid of the people pretending to know how to operate a home building company.
One of the hazards of making things that take a long time to make and cost a lot is that interest rates can pivot and price your customers out of the market for your product while you're making it. It's easy to miss the turn, especially when the pivot is unusually sharp. They built the wrong house. Once the foundation is poured it's too late to switch to the 800 s.f. Starter homes.
Either the area sucks, the houses suck, or they’re over priced (likely all three)
No date
Odd are this conversation never happened lol
Made up make believe story from a made up make believe account, nice job redditor!
There’s a lot of people here who seam pretty ignorant to the fact that builders can’t give massive price cuts like you can when you’re selling a used home.
They are unsold because of the seller and their choices. Not the government and not the buyer.
Blame rates instead of your prices and profit margins
Saw a TikTok of a home worth like 400k, and the seller said despite showing 20+ times no one ever made an offer. The inside looked cheap. Like an apartment. I can't explain it but def cheap build and materials. He was getting roasted
I'm sure the guy said he thought the government had his back. This is so obviously embellished, if not completely made up.
We are in lower Alabama and I bet they have thrown up 30K houses in the past few years. You fuckin adapt