Buying Real Estate

Home Builders are SCREWED (Cancelled Contracts / Housing Crash SOON)

A deluge of CANCELLED CONTRACTS is about to infect the US Housing Market. This is going to be a big problem for Home Builders and could cause a Housing Crash.

Surging Mortgage Rates has made buying a Home in in US Real Estate Market much more expensive over the last three months. Particularly so for newly built homes.

As many was 500k people are under contract to buy a new home that is currently under construction. Many will decide to cancel the contracts when the new home is delivered because they can’t afford the mortgage payments, or can’t qualify for the loan to buy the house.

This surge in cancellations could cause a Housing Crash. But likely in certain markets more than others. Real Estate Markets such as Atlanta, Charlotte, Nashville, Tampa, Dallas, and Phoenix have had the biggest surge in single-family home building. And thus face the biggest risk of a surge in cancellations and inventory that could pop their local Housing Bubbles.

At a state level – both the Florida and Texas Housing Markets seem to be at the most risk. Homebuyers in these states might want to exercise caution.

Worse yet – the Federal Reserve and Jerome Powell seem intent on raising interest rates further, which will likely cause Mortgage Rates go up more. The higher the mortgage rate goes, the more cancellations the US Housing Market and Home Builders are likely to experience.

I suspect the “magic number” where buyers begin walking away from their newly built homes before they’re completed is 5.5% 30-Year Mortgage Rate.


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#HousingMarket #Inflation

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