fbpx
Unexpected Plunge in New Home Sales? 2023's Surging Mortgage Rates Impact?
Deerwood Realty and Friends
Deerwood Realty and Friends
Unexpected Plunge in New Home Sales? 2023's Surging Mortgage Rates Impact?
Loading
/

In the recent months, the U.S. housing market has been hit with an unforeseen curveball. Surging mortgage rates, now at a staggering 22-year high, have caused a significant and unexpected dip in new home sales for September 2023. This sudden downturn unveils the inherent vulnerabilities and uncertainties within our housing market’s framework. Join me as I dissect the latest numbers, expert commentary, and the possible future trajectories of the market. From the role of high mortgage rates to the strategies employed by homebuilders to entice potential buyers, we’re diving deep into the multifaceted reasons behind this decline. Moreover, we’ll explore the ripple effects this downturn might have on related sectors, and what this could mean for both potential homebuyers and sellers. For anyone keen on understanding the shifting sands of the real estate market or considering stepping into it, this comprehensive breakdown is a must-watch.

Subscribe on Youtube!

https://www.youtube.com/c/Deerwoodrealtystl?sub_confirmation=1

Also on Rumble

https://rumble.com/c/deerwoodrealty.

Want to be social?

Locals.com https://deerwoodrealty.locals.com

Facebook https://www.facebook.com/DeerwoodRealty/

Twitter https://twitter.com/deerwoodrealty

Instagram https://www.instagram.com/deerwoodrealty

On the Twitter

Real Estate News and Commentary

https://finance.yahoo.com/news/this-resilient-part-of-the-housing-market-is-cracking-144559448.html

Drop me a line @ media@deerwoodrealtystl.com
We’re online at https://www.deerwoodrealtystl.com/

[00:00:12] Good afternoon. I always like to look at the national news for real estate. All real estate is local. And yes, in St. Louis, it’s going to be different than it is in Los Angeles. Okay. Different than Austin. But I still want to have some sort of national understanding of what’s going on so I can better help my clients. And so I came across this article today on Yahoo, and I wanted to go over it because I thought it was kind of interesting. It talks about the new home construction and something that I didn’t know and that it kind of surprised me, and I kind of want to go over it. So here’s the article. It’s on YouTube or on YouTube. It’s on yahoo.

[00:00:51] The resilient part of the housing market is cracking. Well. I was like, well, what is the resilient part of the housing market? I was like, Things are pretty awful right now here as far as getting deals done with mortgage rates over seven and a half percent on a 30 year fixed.

[00:01:08] So I was like, what are they talking about? And then I remembered new construction. So let’s just go over it. I have some notes. It says, the last bastion of the housing market faltered last month. Sales of newly built homes decreased 8.7% to a seasonally adjusted rate of 675,000 units last month.

[00:01:30] So new home construction had been pretty strong.

[00:01:36] But I was like, how are they doing that? Because at least in St. Louis, where I am, a new house is 50, $60,000 more than an existing home. And I was like, that doesn’t make any sense now. Early on, during the run up in prices, I did help a family out towards the zone of development. And there it was cheaper to buy a new home where you could build whatever you want, where you could have the designs and everything you wanted than it would be to get into a bidding war on an existing home. That made sense to me, to buy a new home then, but it doesn’t make a lot of sense right now. Or it didn’t until I saw this. And so it says, tight inventories of existing homes for sale have pushed some buyers towards the new construction market. That said, that market is, of course, also affected by uncertainty and higher financing costs, although builder incentives can help offset these to some degree. So this is something that’s worth paying attention to and something that I’ve always feared. Working with new home buyers, those with new construction.

[00:02:47] You buy a house and then you wait six to eight months for it to be completed.

[00:02:52] So you can have a dramatic shift in the mortgage rates between the time you purchase the home and by the time you actually close on it. Now, there are different kinds of loans and things like that, but what they’ve been doing on the new home construction is there’s so much profit that they’ve been able to buy down people’s rates to where it works out for them.

[00:03:13] And so that was their trick. That’s how they’ve been able to go for the last, I don’t know, pretty much a year since mortgage rates spiked in the sevens, they’ve been able to offer almost 100 basis points below what you would pay on an existing home. So I see there what people are thinking and why they went in that direction.

[00:03:34] It said rates have also convinced homeowners to stay put rather than sell, further shrinking the inventory among existing homes. That dynamic for a while boosted sales in the new home market. But all bets are off the table as mortgage rates continue to rise. And so most people are stuck with a rate.

[00:03:51] They’re rate bound. They just can’t afford a home once it gets to a certain price and a certain rate. And it looks like, at least for the existing homes, 7% was the rate at which people could no longer buy homes. I mean, it just kind of stopped everything here in St. Louis. Now, there’s still deals to be done, okay? And we’re talking about the extremes. The average home, if it’s priced correctly right now, you’re still going to get a buyer, that’s for sure. No issues right now, but there’s still going to be a pretty good inspection process and there may be some seller concessions on that deal to get it done.

[00:04:34] A majority of builders are using incentives, including trimming prices and offering financing assistance. And so for instance, it says, Dr. Hartin is currently offering a limited time opportunity to lock in a 30 year fixed rate on certain government backed home loans as low as five and a half percent for every home sold, up to 371,000, and a loan amount of 364,000. So think about that. I mean, today we’re running at seven and a half percent and they’re 200 basis points below.

[00:05:01] That’s a pretty good deal, right? That’s a pretty good deal. Now I’ve always been one of those people because I’m conservative in my financing, I’m one of those people that would just say, make the price lower, I’m lower the price guy, I’m not lower the rate guy.

[00:05:20] At some point in time, you have to pay that price. And I would prefer to be lower.

[00:05:26] It’s just the way it is. It says in September, 32% of builders reduced home prices compared with 25% in August. And that’s when you know things are going to get dicey, is when you go to a builder and they have time to talk to me as an agent, okay, that’s when you know things are bad. And then two like, okay, now we’re going to give you concessions, we’re going to give you the taller cabinets, we’re going to do this, we’re going to do that. Now we’re talking. Now we’re talking. That’s what we want. For a while there, you are getting nothing. And you would like it.

[00:05:57] It’s just a disaster. And I’m glad the market’s changing in a way that it can be a little bit more fair for the buyers. The median sales of newly sold homes in August was 430,000, down from July’s average of 436,000, according to the census. But the average sales price was 514,000, slightly above July’s average of 513,000. So you can see that they’re keeping that price high.

[00:06:29] Can you imagine? The average sale price is half a million dollars on a new home.

[00:06:34] Pretty wild stuff.

[00:06:35] So I just wanted to bring that article to you. Look, if you’re going to go buy a house tomorrow, maybe ask the builder for some concessions, okay? Maybe your real estate agent should know that there’s concessions available and can help you through that.

[00:06:51] Right now where I sit in St. Louis, not a lot of people buying anything.

[00:06:58] And it’s going to probably get worse as rates continue to rise. And we also see expenses in the form of energy and food prices continue to inflate. It’s just a very wicked situation right now, as I mentioned a while back. Look, if people are refinancing from 3% rates up into 7% rates just to be able to afford to pay their bills, this could get really ugly. I hope that doesn’t happen. I hope it’s all wrong. I hope things are going to work out great. But I have serious reservations. I have serious doubts as to how things will go in the next couple of months.

[00:07:36] And if you’ve watched any of my videos, you know why. So with that, I’m going to head on out. I hope you enjoyed the video. If you did, hit subscribe or hit the like button or don’t or don’t put a comment in if you’d like. Whatever.

[00:07:50] I don’t even know that we’re building a channel. As much as I just like to have a group of people that is around to just hear what I think about the housing market from the perspective of a real estate broker in St. Louis, Missouri. So I’m out. Thanks for watching.

Podcast Transcript

Podcasts You Might Also Like

October 8, 2024

Multiple offer Shenanigans

October 8, 2024

Should You Use A Rookie Real Estate Agent?

October 8, 2024

It’s OK to wait…..to buy a home?

October 8, 2024

From Rebranded To Out Of Business? What Happened?

October 7, 2024

It is OK to be confused by the NAR Settlement

October 4, 2024

Why I like showing home buyers houses in the Rain⛈️

September 30, 2024

This Video Statistic CANNOT Be True

September 27, 2024

Am I A Successful Real Estate Agent?

September 26, 2024

Home Buyer Lost Out On A House

September 23, 2024

Why is Madeline Tasman Following Me?

Nearby Communities

$500,000

$13,000,000

Clarkson Valley Community Guide

$100,000

$400,000

Lake Tekakwitha Community Guide

$210,000

$30,000,000

Glendale Community Guide

$100,000

$800,000

Byrnes Mill Community Guide

$100,000

$1,100,000

Rock Hill Community Guide

$100,000

$800,000

Hillsboro Community Guide