Dominic Toretto, Letty, 200% discussed on The Duncan Duo
See the fast saga fast and furious movie. If you haven't seen, you know my billboards throughout town that are kind of, you know, meaning. You know Dominic Toretto and Letty from the fast and furious movies Your home sold so fast. You won't be furious. Um, you know, those those have been out there for a while now, and obviously a little problem with the tag along after all of our past clients that we're sending, you know, to check out the movie when when they wish to Um so Home builder sentiment. Drops to 10 Month Low and so the homebuilder monthly index hit a peak of 90 last November, and it's dropped to an 81. I want to talk about this because it doesn't have anything to do, in my opinion with demand. The demand is off the charts. The struggle is the reason why the sentiment is dropped, and builders are less. Uh, excited, um, is declining availability. An increased cost for lumber and building materials because it presses on builders, margins and forces builders too uncomfortably raise prices to such a level that they're afraid of getting, Um, you know, blowback. And and so it's causing builder sentiment to be less because they can't build quality homes. For the price that they want to build them at Based on what's going on in the marketplace. It's just, uh you know, it's just rampant right now. The cost of everything is rising so much. There's so many builders. Are less excited about our real estate market because of the increased costs and the inability to easily pass those costs along to consumers. Yeah, in the sentiment is with a lot of them. I think of the reason that it's falling. Is there okay with some of these delays right now, and they're okay with time going the past because they're able to charge more for the houses and they're waiting for the lumber prices to come down. And they have even though they you know, Some of the articles say they're up, 200%. They were up 400%. They've actually come back halfway down. They are starting to come down a little bit. So a lot of the home builders have been okay with a lot of these delays in the supply chain and all of that, because they believe that they're going to be able to charge a higher price for the home. At the same time, Parks Francisco as as some time passes, you know, because ultimately like if they go out and spend, you know, 2030 40% more on number, um, than they did just a month ago. And then they try and immediately raise houses from 303 27 for the same house. Getting those home's appraised and closed becomes problematic. So they almost because they're seeing this Considerable rising material costs. It's almost like they have to acquire the material and kind of sit back a little bit. Because it's strategy that to set back a little bit and let home values increase in some appreciation happen. Because they don't want to go out and throw these houses on the market and then have them not appraised and people aren't able to close. Yeah, So, so what People don't understand, I think about most most real estate transactions are financed. Most real estate transactions have an appraisal contingency. That basically says that the home must appraise at or above the purchase price, or the buyer makes up the difference. Now, in a hot market like this, um there's certainly plenty of circumstances where buyers are making up the difference. But builders publicly traded companies have this huge target on them. They have to be very conscientious of not doing things that would rock the PR boat, make them look bad as a company and hurt their brand, so it's hard for them to turn around quickly and drastically raise prices without some, you know, kind of, you know. Without some blowback and people being upset about it. So so a lot of builders are simply saying, You know what? Let's acquire our materials, but because prices are rising so much, and we don't want to get stuck holding the bag on homes that want to praise. Because that's such a It's a necessity for the majority of buyers. We're going to pull back the reins a little bit on our You know what I call that cookie cutter developments where you can't argue that one's more valuable than the one that's right next door. Because we need to let some of this stuff kind of work itself out. Yeah, you're seeing it everywhere. Yeah, And I think again, it's just It's rampant right now. So, um, you know, they're just builders that have to be, you know, a strategic and then, of course. You know, there's all kinds of other obstacles. So you know, and I get this as a business person..