Home Builders are SLASHING PRICES on New Homes. Make no mistake: they are preparing for the 2022 Housing Crash.
Newly built Houses in real estate markets like Austin, Nashville, Phoenix, and Tampa are seeing big price drops. As a result of higher Mortgage Rates and a slowing Homebuyer Demand, Home Builders are looking to liquidate inventory before the Housing Crash gets worse.
Cancelled Contract Video from April:
That’s because they know a combination of 1) Record Home Construction to go along with 2) Crashing Buyer Demand means that the 2022 Housing Market doesn’t have long before the Bubble pops.
Wall Street is predicting this as well. The Stock Prices of publicly traded Home Builders such as Lennar, DR Horton, and Pulte Group are down by -40% YTD (compared to market average of -23%). This is a sign that Wall Street Investors are also predicting a Housing Crash.
One trend that is likely to occur is a decline in Housing Starts. Since Home Builders see declining demand, and have nearly 2 Million Homes Under Construction to work through, they will pull fewer permits and start construction on fewer homes.
In my opinion – this will be a good thing for the Housing Market. As fewer Starts will ease the labor and materials shortages that preventing homes from getting finished.
The last thing to monitor is the surge in Cancelled Contracts. According to John Burns Real Estate Consulting, there has been big increase in homebuyers cancelling contracts for homes under construction. Expect this trend to continue as long as Mortgage Rates stay high.
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