You know, here I am, being all positive and such, and after former Fed Chairman Greenspan’s comments in Hong Kong on Monday, and the resulting slide on Tuesday, I realized (actually, re-realized) that while our customers may still be arriving in droves, their buying power is effectively going down.
I’ve been noticing this recently, the underwriters are being increasingly picky. I’ve not lost a deal yet, but I’m aware of more Owner financing, and a lot of last minute lender demands. In effect, it’s a market interest rate increase. (Some people call that the friction economy, but I disagree, I think friction elements are already factored in, and this is an increase in effective rate because of increased perceived risk and quality demands by buyers of mortgage backed securities. Amazing to see that manifest itself almost instantly on the ground.)
Regardless of where its coming from , it has the effect of raising the cost of owning a home, and thereby lowering the amount a buyer will pay.
Going forward, that looks like a lot of demand in the sub 300 range to me…………..Kind of status quo, really, except for the return of softness in the 400-600 range. I’m amazed what $550 gets you in HR these days………
Here’s to having a good credit score…….time to return to the fundamentals….