Builders FINALLY Constructing Affordable Homes

home builders have heard our cries and it looks like they're thinking about building more affordable housing options according to the National homebuilders Association they no longer feel icky about the housing market for the sixth straight month if you don't know what I'm talking about I'm talking about the Builder's confidence index which has to be one of the dumbest things in my brain to think about you know they just feel bad about the market so they're not going to build now how is that even measurable anyway it's just so stupid but with that Builder confidence they're going to go ahead and start building again and we're going to be talking about what they're deciding to do to make these homes more affordable because obviously building costs haven't gone down any so they're making some modifications and we're gonna be talking about some of the articles that have come out about building here in the United States I think you're going to find it pretty interesting I know I did okay first things first so there's this index that's out there it's called the Builder's confidence index and last year in October of last year the confidence was way down the toilet matter of fact a lot of home builders were no longer building single-family homes they have moved over to the multi-family units so they're building apartment complexes condos Townhomes that kind of thing well now they have a better feeling about the housing market and they're wanting to build again I will say this because I lived through the last housing market crash that's when I became a real estate agent the Home Building didn't stop altogether but home builders were in tough shape you know a lot of home builders went bankrupt they had to fold up their business and some of them never recovered or came back altogether even the darkest days of the crash of the housing market the one buyer that was always buying was the first time home buyer they were still trying to get into that market they had a lot more incentives then too because you know we had an oversupply of homes now we have an under supply of homes some of them say we're short across the United States single-family homes some of them said like 4.7 some of them say 5 million but those statistics aren't getting any better as more and more people are deciding to keep their homes they're no longer selling matter of fact in June we're down 29 in the amount of listings for sale would you want to sell your house right now to get into another one no you just stick it out in the house that you're in because who wants to pay seven percent when you had two and a half percent so the Builder's confidence is like hey you know what this is time for us to shine you know we're gonna go ahead and fill in the need we're gonna make some more affordable houses but don't expect to have any kind of like cool stuff on your house because it's gonna cost you which is fine I get it home builders need to build a house and if they're gonna build a house they have to make a profit margin of course and Home Supply building materials have gone up exponentially so they have to change up some things in Helms in order to get them to be affordable for that first time home buyer another plus to this is the median home price actually declined it's now under 400 000. to me that's still pretty pricey I mean my first home cost me 135 000. that same house that I bought for 135 000 is 379 000 and it was built in the 90s it wasn't even that great of an area so let's talk about what the builders are gonna build this article came out from Yahoo news several months ago and I actually talked about it on a live stream because this is how the builders are going to address the homes to make them more affordable so it says Edge interestingly enough it's not in uniform reduction in square footage instead it's a sort of trade-off within the home that all means that the buyer would rather have a larger kitchen space and a larger backyards and front yards than an extra bedroom or additional Living Spaces and there's a trade between larger kitchen sizes and cannibalizing formal dining spaces of the home and let's be honest who uses their formal dining space I eat at my kitchen counter my actual formal dining space I have for paperwork There's No Lie the same can be said for the ground floor outdoor living spaces so what they're saying is that you know you're going to have an outdoor bigger living space and less under air it would make it cheaper because he wouldn't need as much duct work for your air conditioning unit like you wouldn't get as much price per square foot because it's always under roof everything outside is not considered part of the square footage I don't know about you but I live in south Louisiana right now the current temperature is 98 degrees outdoor living space for me not so much it is a cultural thing they do like it here but not me only if it's nice for the four days here in Louisiana it is remember earlier I mentioned Builders confidence was up and that they wanted to like build more homes because now they're they're just feeling so much better about the housing market I don't know in my brain it doesn't make sense to me because there's no like real numbers that are supporting their feeling they just feel icky but let me just show this article from October of 2022. it says Builders called New Home Market unhealthy and unsustainable in October of 2022 I mean it was unhealthy and unsustainable they had no confidence then they were like forced to slow down construction as buyer demand plummets Builders predicted low home starts through 2023 and now what are they doing they're scurrying around now trying to build homes because we don't have enough I have shown the same chart a gazillion times that shows how many houses have been built since the last housing crash and we're not anywhere near that because people make their decisions because of how Builders feel this is why we're in this predicament there's many other causes but this is one of them because they write these articles and then if other builders are like well if the main Builders feel icky maybe I shouldn't be building homes either in the those big major metropolitan areas where they need more homes it's ridiculous not only are we short single-family houses but in apartment homes we need 7.2 million Apartment Homes but we're making all of our decisions and expectations on how the builders feel if it's icky or not but for the last several years the homes that they were building were the ones that wouldn't be necessarily in the affordability range homes that are seeing the biggest decreases in prices are the ones that are the largest homes those little homes a little tiny affordable houses they're still going up they're still having bitty Wars on those specific homes in every single Market even in the markets that have the biggest declines like Austin Texas and Phoenix Arizona and all through the West Coast if anything is below their median range it's still on fire people are still trying to find a home in that affordable range another thing I want to address because people are like well we have nothing to worry about I mean the builders can build the houses you know they're going to catch up because they have more confidence now but like look we still don't have enough homes that are in foreclosure that would make that much of a difference I've said this a hundred times let's just say 50 of the houses went in foreclosure tomorrow it would take months even years before we'd ever see that stock of homes ever hit the market if it didn't go into institutional investors hands first and don't get me started on institutional investors another thing that people are saying that the builders don't really necessarily need to build these many homes the market will correct itself is because a collapse of the Airbnb business let's be honest with one another if the Airbnb business was to fold up tomorrow you're saying that those homes would be necessarily the most affordable houses you're putting in your mind that they would be very affordable homes most likely if they're vacation homes in vacation spots they wouldn't be something that would help the affordability crisis here in the United States they're not going to be in those areas that have year-round work think about anything along the beach you know they have a season and so those are going to be the houses that would be in that affordability range they're going to be the most expensive homes then you have a lot of Airbnb bees that are like Yurts and tiny homes those aren't homes that can go on the market that people would want to purchase in a typical home sale you know a good portion of the United States is looking for a home that's like that typical three-bedroom two-bath and if you condense down exactly how many of those homes are at Airbnb it's not going to make a nearly a dent in the affordability crisis here in the United States even if every single Airbnb folded up tomorrow it still isn't going to make that much of a difference a lot of those people that own airbnbs that are struggling are going ahead and churning those into rental homes which isn't necessarily a bad thing but for people that have invested all this time and money to bring up a house up to par to be on the market and they want to hold it on for a long-term rental I don't really blame them because that's a lot of time and money into an investment so you might as well get it somewhere whether it's a long-term rental or a short-term rental I have my own love hate relationship for Airbnb so I'm sure you do too you can let me know what your love hate relationship is with them as of today building has started but it doesn't necessarily make it affordable according to Marketplace it says new home construction is booming and here's why most of it isn't affordable according to the article housing starts grew more than 21 percent from April to May according to the U.S Census Bureau that's up more than six percent over this time last year so that's more good news given how few existing homes are for sale these days as new construction should eventually help with the affordability problem at least in theory right but much of what we're being built these days is high-end housing including larger homes and luxury apartments building a new house has never been more expensive at least that's how it seems according to Clint Mitchell who owns a Building Company in Indianapolis first it was land prices then it was covid and then there was the inflation of all sorts of building materials now I know a lot of you want to blame the home builders and say they got a little bit greedy and don't get me wrong some of them did but they had to offset some of those costs somehow especially with building materials blowing up in price so exponentially everybody saw what happened with Lumber during that time it was insane and so right now if you add on high mortgage rates and a house that might have been within reach for a first time home buyer a year ago it just isn't anymore and that's because of the interest rates and the cost of building materials so Builders have looked to those who are out in the market and are able to buy that's mostly people who have more money and then want a higher end house he said I'm gonna argue with that because I know for a fact talking to real estate agents across the country that that is not true there are so many pent-up buyers that want to purchase a home there's just nothing in their price range the median price for a home may have decreased to what 374. that still isn't affordable for a good portion of the United States 374 is the expensive house the mortgage rate for that is like near the sevens so that would be a very expensive payment for somebody for the median price home if you find anything less than the median price home right now it's still a bidding war she said historically High income households move into new construction the units that they move out of filter down to the more income Spectrum yeah that would be true except for lower income homes now are filtering into well we all know into the investors hands especially through that Sunbelt area like all the way from Atlanta Georgia North Carolina all around there all the way down through Louisiana and up through Texas investors love that area and they've been buying up as many small homes as possible and turning them into rental properties and a lot of the new building that you see in the areas like Phoenix Arizona and Texas even though they look like first-time home buyers their bill to rent housing and I'm not a big fan of build to rent housing because it is taking away the American dream from as many people as possible but some Builders aren't on the same track as this Builder right here there are some people that are saying that they're looking to build more affordable homes because they know exactly what's going to be happening if the market was to turn because it doesn't matter if you're in a bad Market or a good Market first-time home buyers always drive any housing market and also according to the National Association of home builders this is what they say and what their confidence means it says Builders are feeling cautiously optimistic about the market conditions giving the low levels of existing inventory an ongoing gradual improvements for Supply chains they're cautiously optimistic but if they went ahead and stayed with their whole plan with sticking to affordable homes they'll sell like hotcakes I know that for home builders it's been very difficult to find affordable land but as you know I've spoken about this a million times that you can work with local governments to get pieces of land that they've had on their books Forever at a more discounted price or below market rate it belongs to the city anyways you might as well use it for affordable housing all right well back to the article it says this month marks the first time in a year that both the current and future sales components of the HMI have exceeded 60. as some buyers adjust to the new normal of terms of interest rates the Federal Reserve is nearing the end of its tightening cycle as it's good news for the future market conditions in terms of mortgage rates and the cost of financing for Builders and new developments I will say this if you're looking for Home Loan and you get a home loan from a building I want you to go ahead and take those terms and bring it to another lender and see if they can meet or even do better than what the Builder's offering in the long run really what you want is a better deal on your loan that you're going to be paying over 30 years just make sure you do all your homework ahead of time when you're when you're looking at a new home to buy now if you're looking for like the bigger houses man you can really try to work the builders over right now because they're having a harder time selling those big houses in comparison to those little tiny tiny houses but if you're a home builder and you're like I don't know if I should build right now if you're going to build build small you'll sell them like hotcakes there's one more quote that I want to read to you though from the National Association of home builders and it says shelter cost growth is the leading source of inflation and such costs can be only be tamed by building more affordable attainable housing like I've been saying for sale for rent or multi-family and single family he said by addressing supply chain issues in the skilled labor shortage and reducing and eliminating inefficient regulatory policies such exclusionary zoning policy makers can make it important as much needed role in fighting inflation what do you know what is the biggest inflation that we've had housing there are some people that are paying over 42 percent of their income just to have a place to live that's a problem and it can't just be solved by building more apartment buildings we do need more single-family homes I've been saying this over and over again I think this is all by Design like they want us to rent forever so I'm hoping they'll get this together oh this is an interesting statistic 25 of Builders reduce the home prices to bolster the sales in June the share was 27 in May and thirty percent in April to 36 percent in November they're actually giving less and less incentives so if you're thinking about it get yourself a deal so now that the home builders are going to address the affordability crisis with making more affordable homes I think it's a really smart idea no matter what the housing market is first-time home buyers are always what drives it whether it's the worst housing market in history or the most unaffordable housing market in history homebuilders can answer the call and get them done quickly I do do want to tell you this it does take time for whenever they feel icky to start building homes anybody that knows anything about Land Development it's not a quick process so even though they may not feel icky right today they may start scraping land and get in with developers to start building homes and they might feel icky tomorrow and stop and halt so only time will tell if this is actually a good thing for the affordability crisis here in the United States but I would love to hear your opinion in the comments section below to watch more videos about the affordability crisis and home builders you're going to watch these videos right here my name is Christina smallhorn your real estate Whisperer and I tell you all this because good real estate information matters

Channel: Kristina Smallhorn

Views: 49,271

Keywords: your real estate whisperer, homes for sale, Kristina Smallhorn, real estate, realtor, home builders, new construction, affordable housing, affordable homes, first-time buyers, home buyer, home construction, home affordability, affordable home construction

Id: fVlZk70tdnc

Length: 14min 40sec (880 seconds)

Published: Wed Jul 12 2023