The Cleveland home builder comment below hits the nail on the head on why the housing market will crash. The current housing market is smoke and mirrors. The only reason "values" have hit the stratosphere is because the Federal Reserve has been juicing the market with artificially low interest rates and has been making large scale purchases of mortgage backed securities that no one in their right mind would buy at current prices. In the words of George Carlin, "It's all bullshit". And why was this done? Because the Democrat party and many Republicans used the "Covid emergency" as an excuse to get rid of the Evil Orange Man and completely queer the financial markets. This will go down in history as the most moronic and stupid action ever taken by the "leadership" of the country. If you think that your house is truly worth what Zillow tells you it is worth, you are in for a reality check in the coming months. The Federal Reserve's moronic activity is coming to an end only because:
a. price inflation on every item under the sun is not going away anytime soon
b. the dollar is on the cusp of losing its world reserve currency status
If you bought a house during all of this bullshit, congratulations. You are now the proud new owner of a snorkel mortgage. Enjoy.
The regional breakdown is shockingly uniform in just how quickly it got ugly across the entire nation:
Dallas builder: “Interest lists are shrinking or buyers are truly pausing.”
Houston builder: “Many first-time buyers simply no longer qualify with the increase in interest rates, as their debt-to-income ratio gets out of whack.”
San Antonio builder: “Traffic has been cut in half since the hike in rates.”
Raleigh builder: “Investor activity has slowed dramatically.”
Provo builder: “Investors are evaluating the investment more critically than in the past.”
Washington DC builder: “Traffic half what it was in March. Worried about first time buyers. Many fewer REAL buyers than number of people collected on interest list last 6 months. Certainly more attempts [from buyers] to negotiate.”
Seattle builder: “Pause by a large population of buyers. To achieve our desired [sales] pace, we had to make price adjustments. Rates starting to knock people out of qualification.”
Riverside San Bernardino builder: “Cancellations are starting to creep up due to loan declines and job losses. Waiting lists are certainly smaller. Saw an immediate change in buyer behavior when rates climbed over 5%.”
Los Angeles builder: “Buyers who are stretching to purchase have become more cautious.”
San Diego builder: “Buyers are definitely a bit more edgy.”
Denver builder: “Sales are slowing due to higher prices and rates. Backlog of buyers have remained but we are seeing new prospects priced out with interest rates and anticipated payments. Conforming loans quoting over 6%.”
Boise builder: “Rising interest rates may have pulled some buyers forward, and we expect to see a slowing of sales in the coming months as a result.”
Salt Lake City builder: “In our lower priced segments, buyers are compromising and reducing options.”
Bend builder: “Our market has slowed and prices are starting to drop.”
Atlanta builder: “Seen a decrease in the number of potential buyers who are participating in best and final offers on homes/homesites.”
Knoxville builder: “Detached 2,000-3,000 square foot product still selling, just not with 3 buyers for every home like a few months ago.”
Allentown builder: “Double hit of higher home prices and higher mortgage interest rates clearly has reduced the number of qualified buyers. Our waiting list is almost zero as of April 30th.”
Philadelphia builder: “Between higher interest rates and higher sales prices, along with high gas prices and a volatile stock market, we’re seeing a pullback in our sales.”
Tampa builder: “We’ve seen a significant shift in buyer behavior in the last 30 days. Florida was on fire and pricing has really come to a high point, and people are not willing to pay the prices anymore.”
Indianapolis builder: “Traffic has significantly declined and people have paused on moving forward with purchases.”
Kansas City builder: “Our lower end product has paused or slowed dramatically.”
Columbus builder: “Higher rates are definitely tempering buyer enthusiasm and traffic.”
Baltimore builder: “Buyers aren't putting in as many options as they did last year.”
Reno builder: “Cancellation rate last month more than doubled from 6% to 16%. We attribute this to buyers that did not lock interest rates early in purchase process. Also seeing many buyers put buying decision on hold.”
Fresno builder: “Finding an increase in cancellations due to the rate increase. The majority of cancellations are resulting from fear vs non-qualification.”
Cleveland builder: “Once we reach home closings, about 5% of our current customers on the books will be forced to bust out as they originally qualified at a 3.25% rate and won't be able to stretch beyond this.”
Sacramento builder: “Seeing trouble qualifying for entry-level buyers as they are priced out by rates.”
San Jose builder: “Quality traffic has significantly decreased.”
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