Anonymous wrote:Cool. I'm going to go out and buy a new build in Bethesda for cheap!

Won't be cheap but you can probably get it for less than an older home of the same size with similar upgrades in the same school district.

Cool. I'm going to go out and buy a new build in Bethesda for cheap!

Anonymous wrote:So is this pandemic-related, as in builders bet on the virtual work option and now have too many houses far from urban centers because companies are calling their workers back to the office?

That maybe part of it, but many of the houses selling for less than comparable older homes were built near urban centers. The issue is that a builder will have a bunch of units they need to sell, and there are fewer buyers right now due to rates. So they need to lower prices to incentivize sales because they are trying to sell 5 or 10 or 20 homes, not just one.

Anonymous wrote:Builders need to sell. Homeowners don’t.

It's this. It costs builders money to sit on a bunch of empty homes while buyers are scared off by rates, so they have no choice but to lower prices and offer incentives unless they want to sit on this units for a year or more until rates come down (if they do). Developers have a cycle for new builds and the rate increase has greatly increased it, which means they are losing money waiting for homes to sell, which reduces the capital they have for future projects.

I bet if you could separate the sales of second and third homes from primary residences, you'd see the same thing. When someone decides to sell a home they don't currently live in, they usually can't just let it sit for months and months waiting for someone willing to pay asking, as they pay taxes and utilities and any borrower costs in the meantime. Whereas if you live in the home you are selling, you can hold out for "make me move" money unless you have some other compelling reason to sell.

Are new homes being built in areas with stable real estate markets or in areas where the demand was artificially inflated based on COVID and/or speculation?

I don't see many new homes being built in the DMV where the market is pretty stable. Austin TX would be a very different situation.

So is this pandemic-related, as in builders bet on the virtual work option and now have too many houses far from urban centers because companies are calling their workers back to the office?

Anonymous wrote:

Anonymous wrote:Garbage data since it's not $/sf

$/sf is garbage unless you can normalize for absurdly different land values.

Yep. Good portion of new builds are in farther out suburbs and exurbs that are in less desirable locations such as clear-cut farmland. Not comparable to existing homes that are on average in better locations.

:whisper: and this is also why building more homes with looser zoning will lead to lower prices. :scurries back away to YIMBY land.

Anonymous wrote:Garbage data since it's not $/sf

$/sf is garbage unless you can normalize for absurdly different land values.

Garbage data since it's not $/sf

Anonymous wrote:Builders need to sell. Homeowners don’t.

Exactly. I'm not gonna give up my 2.6% even though we could stand do downsize. It'd be expensive to downsize!!

Does this control for the type of housing being built? Condos are going to be cheaper than SFHs, generally speaking.

Builders need to sell. Homeowners don’t.

This was such an interesting read. New construction prices are down nearly 20% nationwide, while existing home prices have barely nudged downward.

And the new home prices don't reflect all sorts of builder incentives like rate buydowns, free upgrades post-closing, longer builder warranties, etc.