Homebuilders are hungry for buyers. Sales volume of newly constructed homes in November fell to its weakest level since December 2016. As a result of such feeble salesvolume, homebuilder confidence levels have dropped by 8 points to a two-year low.

Mirroring weak sales volumes, building stocks on Wall Street have lost valuation by one-third this year. Last year’s housing stock numbers on December 29, 2017 were an average of 261.4. This year on November 16, 2018, average building stocks were 169.3 according to the Bloomberg Intelligence North American Home Builder Valuations Peers Group,

To make matters even worse, homebuilders are faced with even more challenges… a stronger dollar, immigration restrictions on high-skilled workers and a new flood of supply in already saturated markets. South Americans and Chinese buyers are reluctant to buy in Miami and California due to the strength of the dollar; high-skilled immigrants are reluctant to buy in Austin and San Jose due to restrictive immigration policies; and, in the already oversupplied condo market in Manhattan, an additional 4,000 new units will be listed in 2019.

So, what is any reasonable homebuilder and/or real estate agent representing a newly constructed residential property to do? Offer incentives.

Builders in Seattle, where prices have doubled since 2012, agents/builders are now offering their potential buyers cash to “buy down” mortgage rates. Agents in suburban Dallas where populations have jumped +8% in the last year are now rebating their clients all but $1,000, or even $750, of their commissions.

Real estate agents are reporting sales levels at 50% of those in 2016. Some are offering price reductions and free room additions “…on a scale like I’ve never before offered in my life.” And others keep handing buyers discount sheets with red lines through original sales prices to the point that agents overhear buyers say things like “Everywhere I go I see that red line. I don’t want to buy at the top of the market.”

The US housing market is not the only housing market in the world that is hungry for sales. Japan’s local governments and communities, particularly in rural areas, are giving away vacant home for free, according to its Ministry of Internal Affairs and Communications. The Fujitsu Research Institute indicates, “Japan faces significant economic and social impacts from its aging demographics over the next three decades. Impacts here go much beyond newly built construction. All residential markets are simply oversupplied.”

Put on your seatbelts, everyone. Get creative. Become diligent. And call Tim and Julie Harris for a coaching appointment.




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