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Message
re: Home sales tanked in May
Posted on 6/25/25 at 7:57 pm to TorchtheFlyingTiger
Posted on 6/25/25 at 7:57 pm to TorchtheFlyingTiger
Prices have dropped a ton by me. Some areas I’ve bought rental homes in that haven’t seen prices under $400k I’ve been seeing prices for rental quality in the high $200s. I’ve had some price trackers set that haven’t gone off in 3-4 years and I’m shocked are still set, that are emailing me again.
The reality is that between low interest rates and COVID limitations on building prices just shot up, and it was basically a small bubble that seems to be bursting.
The reality is that between low interest rates and COVID limitations on building prices just shot up, and it was basically a small bubble that seems to be bursting.
1
Posted on 6/25/25 at 8:21 pm to lsuconnman
quote:
That’s also irrelevant. That 650k@3.0% was $2,700/mo. If those people simply want to move to an equivalent house it’s now $4,100/mo @6.5% To keep the same mortgage payment, they now need to find an equally motivated seller that will discount their $650k home to $400k, and they need to eat every dollar less than they originally paid.
This is a much better way of putting what I was trying to say above.
If I’m in a home I bought back in 2018 and have a 2.5% mortgage and want to buy a house valued at ~30% more, my note isn’t going up 30%, it’s going up 300%.
All the people who bought a “starter home” 5-10 years ago have to consider a gigantic increase in monthly housing expense to move up to the next tier of house/neighborhood.
Posted on 6/26/25 at 3:42 am to baldona
Haven’t really seen the drop here.
We have a hood of 267 homes. 6 houses for sale. 4 of the 6 went under contract in less than 30 days. Prices are still insane ranging from 1.1 down to 825k for an unfinished basement.
We bought in 2018 for 522 with a sub 3 mortgage refi around Covid. It’s still nuts here. I don’t know how these younger families are buying 1 million dollar homes unless inheritance.
We have a hood of 267 homes. 6 houses for sale. 4 of the 6 went under contract in less than 30 days. Prices are still insane ranging from 1.1 down to 825k for an unfinished basement.
We bought in 2018 for 522 with a sub 3 mortgage refi around Covid. It’s still nuts here. I don’t know how these younger families are buying 1 million dollar homes unless inheritance.
Posted on 6/26/25 at 7:21 am to TorchtheFlyingTiger
quote:
Zoned for good schools in a county consistently ranked top 3 in FL (#1 by some counts) Still zero offers after 2-3 months during peak moving season for families.
Assuming that's St. Johns County? There is probably still a ton of new building going on there and new homes are being steeply discounted by builders. Tough to compete with that - the new homes are cheaper today than they were 2-3 years ago.
Been a while since I lived in the Jax area, so it may be different, but I doubt it. There was a lot of growth in between Jax and St Augie...
Posted on 6/26/25 at 8:09 am to bigjoe1
My neighbor works for a faucet company that most Americans are undoubtedly familiar with. She handles the bulk orders from major home developers like Toll Bros, KB Homes, Lennar, etc for virtually the entire State of FL.
She said that sales have shifted a bit in the past two years; selling less high end stuff and selling way more generic low end stuff instead.
My guess is that’s indicative of less single family homes being built; and when they are they are using the cheapest parts possible. People can’t afford the little upgrades right now. Of course; the cheap stuff is always associated with multi family or apartments. And those are popping up everywhere around me.
She said that sales have shifted a bit in the past two years; selling less high end stuff and selling way more generic low end stuff instead.
My guess is that’s indicative of less single family homes being built; and when they are they are using the cheapest parts possible. People can’t afford the little upgrades right now. Of course; the cheap stuff is always associated with multi family or apartments. And those are popping up everywhere around me.
Posted on 6/26/25 at 9:19 am to bigjoe1
quote:
At some point you'd think prices would start dropping sharply.
I’ve posted several times over the last few months why some (many? most?) builders won’t (or can’t) slash prices.
I’ve seen behind this particular curtain and let’s just say that prices are only partially related to business fundamentals like costs, margin, etc.
Posted on 6/26/25 at 9:59 am to JohnnyKilroy
The only people who are buying and selling right now are people who are being forced to (job related or divorce etc).
__________
Agree with your comments, but the above statement is a narrow view. There are always folks with promotions and stable revenue in the market as well.
__________
Agree with your comments, but the above statement is a narrow view. There are always folks with promotions and stable revenue in the market as well.
Posted on 6/26/25 at 10:25 am to Longhorn Actual
quote:
I’ve posted several times over the last few months why some (many? most?) builders won’t (or can’t) slash prices.
I’ve seen behind this particular curtain and let’s just say that prices are only partially related to business fundamentals like costs, margin, etc.
I'm not following?
Posted on 6/26/25 at 10:44 am to baldona
quote:
I'm not following?
I know some builders in larger HOA communities can't drop prices because of the blowback they would get from the people that bought last year. Instead of dropping prices, they offer upgrades, closing costs, and deals on financing.
Posted on 6/26/25 at 11:40 am to Jax-Tiger
Buying down points to sell their existing stock is also a used car gimmick the builders can’t sustain in perpetuity.
Posted on 6/26/25 at 12:18 pm to bigjoe1
Let's see what happens in June. I sold my house a few years back. I was told that June is a great home selling month because the kids are out of school, people have time to move, and people want to get in their new house for the new school year by August. So, a lot of people list their homes in May with the idea of going to sale in June or early July so they can get their kids registered in the schools they want them to go to the following year.
Posted on 6/26/25 at 12:59 pm to baldona
The banks’ basis isn’t limited to build costs and acceptable operating costs. Builders are baking profit margin into the itemized costs, effectively borrowing their desired profit from the bank up front.
It effectively shifts the risk from the builder to the bank/underwriter (which is why I doubt everyone in the chain is doing it knowingly/willingly).
Builders have less incentive to reduce prices since the bank is holding the risk, and in some cases, they couldn’t lower prices even if they wanted to because they can’t dip below the banks’ basis without it throwing up a flag.
Home prices are through the roof because every line item is fluffed, every component of the fluffed line item was already fluffed to begin with, “contingencies” were budgeted in, then X% margin was baked back in to the big ticket items (concrete, lumber, etc.).
Hence “you’d think prices would come down drastically”…but they don’t.
It effectively shifts the risk from the builder to the bank/underwriter (which is why I doubt everyone in the chain is doing it knowingly/willingly).
Builders have less incentive to reduce prices since the bank is holding the risk, and in some cases, they couldn’t lower prices even if they wanted to because they can’t dip below the banks’ basis without it throwing up a flag.
Home prices are through the roof because every line item is fluffed, every component of the fluffed line item was already fluffed to begin with, “contingencies” were budgeted in, then X% margin was baked back in to the big ticket items (concrete, lumber, etc.).
Hence “you’d think prices would come down drastically”…but they don’t.
Posted on 6/26/25 at 2:34 pm to bigjoe1
At these rates prices need to drop like 20% where I am.
Posted on 6/26/25 at 2:55 pm to boogiewoogie1978
June is going to be way worse.
Dallas has been pretty steady and it’s slowed dramatically in June.
We are selling out of a very desirable area right now and we’ve been on market for 7 days with no offers. Priced aggressively against comps from Q1 and April/May with no offers.
Yall will laugh at 7 days but most good houses that were priced correctly in good areas were still moving first weekend in Dallas proper.
Going to need some news around rates to pick this thing back up I’m afraid.
Dallas has been pretty steady and it’s slowed dramatically in June.
We are selling out of a very desirable area right now and we’ve been on market for 7 days with no offers. Priced aggressively against comps from Q1 and April/May with no offers.
Yall will laugh at 7 days but most good houses that were priced correctly in good areas were still moving first weekend in Dallas proper.
Going to need some news around rates to pick this thing back up I’m afraid.
Posted on 6/26/25 at 3:12 pm to bigjoe1
quote:
I'm in Huntsville/Madison, Al. and builders are throwing up homes and multifamily properties like there is no tomorrow. I do know some new apt. complexes are way behind on their occupancy projections.
It's almost like the market works and always adjusts. Perhaps just not instantly like some people would like it to.
And a reminder that no one has a right to a home they want at a price they're willing to pay in a location they choose, even though some act like they do and pitch a fit when they don't get it.
Posted on 6/26/25 at 3:13 pm to Jax-Tiger
quote:
Jax-Tiger
quote:
I sold my house last fall and have been renting. Will buy when we get the right opportunity.
Didn't you just move down there and buy a few years ago? Why sell so quickly?
This post was edited on 6/26/25 at 3:31 pm
Posted on 6/26/25 at 3:18 pm to lsuconnman
quote:
That’s also irrelevant. That 650k@3.0% was $2,700/mo.
If those people simply want to move to an equivalent house it’s now $4,100/mo @6.5%
To keep the same mortgage payment, they now need to find an equally motivated seller that will discount their $650k home to $400k, and they need to eat every dollar less than they originally paid.
Are you assuming an equal down payment on the new house as the original? Because most will be coming into that next home with a larger down payment after cashing out their equity on the old one.
This post was edited on 6/26/25 at 3:19 pm
Posted on 6/26/25 at 3:27 pm to STLhog
quote:
Going to need some news around rates to pick this thing back up I’m afraid.
Rates won't come down all at once. It will probably happen a bit at a time over months. The initial rate cut might cause people who are in a position to wait to stay on the sidelines until rates have bottomed out.
Posted on 6/26/25 at 3:31 pm to Jax-Tiger
For sure. I think many are just hungry for some kind of good news.
I think any signal at all at this point will help the current Dallas market.
Decent time to buy at list or slightly lower. It’s been 5 years of multiple offers and over list for good houses/neighborhoods.
I think any signal at all at this point will help the current Dallas market.
Decent time to buy at list or slightly lower. It’s been 5 years of multiple offers and over list for good houses/neighborhoods.
Posted on 6/26/25 at 7:24 pm to Longhorn Actual
I will admit I am 100% ignorant on the home building business, but I just cannot get my head around this:
Why would someone take a loan on (potential) future income when they don’t have to?
If they overestimated the profit margin they baked into the loan, and they have to sell lower than the loan, I assume it won’t be the bank holding the bag?
quote:
The banks’ basis isn’t limited to build costs and acceptable operating costs. Builders are baking profit margin into the itemized costs, effectively borrowing their desired profit from the bank up front.
Why would someone take a loan on (potential) future income when they don’t have to?
If they overestimated the profit margin they baked into the loan, and they have to sell lower than the loan, I assume it won’t be the bank holding the bag?
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