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Home Builders Offer to Sell Homes in Bulk at Discount to Investors As mortgage rates hit a 15-year high and individual buyers back away, builders look to unload both planned and completed homes
Kinloch Partners, a rental real estate investment company, is fielding as many as 10 calls per week from homebuilders offering to sell homes in bulk to reduce inventory. Builders will even sell an entire subdivision to a single investor.
When builders such as Lennar & KB Home sell homes in bulk to investors, they give about a 10-15% discount in the price.
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Even in strong markets, a discounted sale to a landlord can be an attractive deal for a builder. By selling homes in bulk, builders save on the cost of operating a sales office and other marketing expenses. Homes planned for rent are also cheaper to complete because they involve fewer customizations.
It is wise of home builders to quickly dump dead inventory in bulk to investors. Carrying inventory is expensive. Selling homes one at a time in a dead housing market carries high overhead.
The housing market is dead. The musical chairs are over and home builders still standing want out. It is smart of them to dump unsold inventory off on investors.
These homes are going to be rented out, not sold to owner occupants. That is removing supply during ahousing shortage and is yet another factor that home prices will not crash like they did in 2008. In 2008 we had an initial oversupply of housing that surged with a foreclosure crisis.
None of that exists today, so home prices are not likely to crash. They did leap up fast, and what goes up must go down. There should be a correction in prices, but I don't see a crash in prices.
The American empire will fall, because of this concentration of wealth. Nobody is going to do anything about it, as everyone is looking out for their own greed and wants to keep what is theirs and amass more assets over worrying about the long term future of the middle class and the nation as a whole.
We aren't on the precipice of some great freefall. What is going to end up happening is the market will just freeze up even more. Buyers, like myself, are clearly getting the worst of the worst right now so they're just sitting on the sideline, and sellers aren't interested in selling now because unless they own the home, they are going to get stuck with a 7% mortgage and give up their 3% one.
So - new construction will tilt even more to rentals, like what's happening here. The rental market will soften first, before the home market, and eventually either prices will reflect the new interest rates or the fed will drop rates some and prices will remain.
In the meantime, people sit in not optimal situations just waiting. The FED really screwed this up in 2021 with sitting on rock bottom rates and letting this get out of control.
It is wise of home builders to quickly dump dead inventory in bulk to investors. Carrying inventory is expensive. Selling homes one at a time in a dead housing market carries high overhead.
The housing market is dead. The musical chairs are over and home builders still standing want out. It is smart of them to dump unsold inventory off on investors.
These homes are going to be rented out, not sold to owner occupants. That is removing supply during ahousing shortage and is yet another factor that home prices will not crash like they did in 2008. In 2008 we had an initial oversupply of housing that surged with a foreclosure crisis.
None of that exists today, so home prices are not likely to crash. They did leap up fast, and what goes up must go down. There should be a correction in prices, but I don't see a crash in prices.
Home sales are crashing.
As if a cycle has never happened in the housing market. It is a bit ironic a lot of people are reacting to this with oh no, we shouldn't let "Wall Street" buy houses. However "Wall Street" buys houses with a lot different financing than the regular homebuyer and puts up equity from an investment fund which by nature sees wins and losses. If it was "Wall Street" that bought houses in 2004-2007 there wouldn't have been a crisis, just a lot of pissed off high net worth investors.
The American empire will fall, because of this concentration of wealth. Nobody is going to do anything about it, as everyone is looking out for their own greed and wants to keep what is theirs and amass more assets over worrying about the long term future of the middle class and the nation as a whole.
Excepting a few micro-economies and Norway's special case......you realize the in PPP terms we have the richest middle class of any size in the world by far. For reference people right at our poverty line are only a little less well off than the bottom of the middle classes in The UK.
For several decades more of those exiting the middle class have joined the upper classes than the lower classes.
Excepting a few micro-economies and Norway's special case......you realize the in PPP terms we have the richest middle class of any size in the world by far. For reference people right at our poverty line are only a little less well off than the bottom of the middle classes in The UK.
For several decades more of those exiting the middle class have joined the upper classes than the lower classes.
This may be true but wrong metrics are used to demonstrate 'resilience'. An average GDP and such mean very little when it hits the fan.
Instead, if we could measure the strength of middle class, by calculating how long an average family is able to sustain the same standard of living, if everybody loses their job for multiple years.
You would be surprised that many countries' equivalents of middle class would be way more resilient.
Basically, we look good on paper in any snapshot of time, but that's not the whole story.
As usual, I hope I'm wrong.
This may be true but wrong metrics are used to demonstrate 'resilience'. An average GDP and such mean very little when it hits the fan.
Instead, if we could measure the strength of middle class, by calculating how long an average family is able to sustain the same standard of living, if everybody loses their job for multiple years.
You would be surprised that many countries' equivalents of middle class would be way more resilient.
Basically, we look good on paper in any snapshot of time, but that's not the whole story.
As usual, I hope I'm wrong.
People have been movin' on up in the USA for a very long time.
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