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Jeffrey Deuitch
Reventure Consulting
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Comments by "Jeffrey Deuitch" (@jeffreydeuitch2146) on "Mortgage Rates CRASH the Housing Market" video.
Been there for last 2 downturns. Bingo! As soon as prices drop, those with investment properties sell. It is time to take profits. More inventory, less demand and will to drop prices to get out before the others. Not rocket science and anchored in historical trends.
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Because when prices go down rents do to and maintain same CAP rate. Has happened before and can easily happen again. Rents will be the last support. This, you are correct about. Speculators will be out once prices drop. Those who buy for rental income will still be around. Do you think rent is the primary reason for currect pricing? If so then materials shortages would not have boosted prices to same extent. The way up is a collection of reasons as is the way down, including just plain sentiment.
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Inventory in new construction is grossly misunderstood. I am professionally involved 90% in new construction. They look at completely built housing as inventory. This is not correct, atleast in my area. A new home development has, say, 300 vacant lots. The way they sell is that the prospect goes through the models of which there is typically 4 to 6, signs the contract with the builder for the purchase, and the builder then builds it and it closes within a couple days after completion. The inventory is the vacant lots ready for contract, not finished houses. These builders will start a handful of new builds and market them throughout the construction process. In our area, they are seldom finished prior to getting under purchase contract. Thus the inventory data published is understated since those pertain to either finished houses or issued permits. Think about it.
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