Interest Rates:

• Interest rates have spiked to 6-8%
• Home prices have risen, making affordability a challenge for many buyers
• Supply chain issues have caused higher costs for building materials like paint and lumber

Builders' Response:

• Builders are putting the brakes on new single-family home construction
• Concerns about not being able to sell homes at current prices due to high interest rates
• Increased cancellations of existing contracts have further impacted builders' confidence

Impact on Home Buyers:

• Fewer homes being built may seem like a good thing for buyers, but it won’t necessarily lead to lower prices
• Builders' costs remain high, and fewer new homes on the market may not result in better deals for buyers
• Resale home sellers are unlikely to offer significant price reductions

Future Outlook:

• Expect fewer homes for sale in 2023 and beyond, extending into 2024 and 2025
• Interest rates are not likely to decrease anytime soon, with prime rates expected to rise, pushing mortgage rates to 8-9%
• The housing shortage will worsen as fewer new homes are built

Current Housing Market:

• Despite more homes being for sale in 2022 than in 2020, there is still a shortage of quality homes for buyers
• Many homes for sale require significant repairs or are in undesirable locations
• Homeowners with low mortgage rates are holding onto their properties, limiting available inventory

Conclusion:

• Reduced construction of new homes is a negative development for the housing market, as it will keep prices high, even with high interest rates

Engagement:

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