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House of cards.
Read this article, homebuilders way too optimistic about future sales imo...
“The U.S. housing market has gone cold”
Wait till the rates rise further.... 3/4% hike today..
A person who was prequalified for a $500k mortgage at the beginning of the year would have anticipated a payment of $2,135 per month to service the debt. If you take that same payment and fast forward it to last week, instead of a loan amount of $500k, that $2,135 per month would have gotten you a loan of about $362K. Has that person's income increased since the beginning of the year? Not likely as most people get raises once a year and they kick in at the beginning of the year. Not all but most. Underwriting criteria hasn't relaxed in that time and max debt to income ratios allowed by the lenders have either remained the same or been tightened to account for the fact that all of the peripherals cost eat up so much more of a person's income now. So that $650K house which was on the market back in February or March was looking at a pool of buyers who were pre-qualed at a max payment of $2,135 per month and knew they could count on paying for that house using a mortgage of $500K. Fast forward that $650K house to today's market and those same borrowers no longer have a $500K mortgage to use. Now it's $362K. And gas is $2/gallon more. Heating oil is $2/gallon more. Every trip to the supermarket is $100 more. Do they even feel comfortable going with that max payment? Where does the money for that $138K ($500k minus $362K) of lost purchasing power to make up come from? They were already having to come up with nearly $200K in cash to make that transaction work with a $500k loan. Will the shortfall of cash come from the house that they are trying to sell to the $300K - $400K mortgage tier of buyers who are facing the same problems, albeit in a lower income bracket? Maybe it'll come from liquidating that investment portfolio that's done so well over the past few months.
If you think this won't have a major impact on the real estate market, you're only kidding yourself. Maybe you need to start reconsidering your sources for news and information.
Fed raising rates another 3/4% today !
The Sherwin-Williams Company (SHW)
225.80-28.49 (-11.20%) <--- WOW wow Wow !