The Investing for Beginners Podcast - Your Path to Financial Freedom Understanding Home Builders: Insights from Brett & Ryan of Chit Chat Stocks
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Dec 12, 2024 Explore the intriguing world of home builders with insights on how rising interest rates and regional market dynamics affect the industry. Discover the impact of new home sales amidst existing home shortages and the innovative land option models that minimize risks for builders. Learn key metrics like cancellation rates and inventory turns, as well as strategies that encourage home buyers despite affordability challenges. This discussion navigates the balance between market opportunities and the cyclical risks faced by investors.
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Interest Rate Impact on Home Builders
- Rising interest rates impact home builder affordability.
- However, current homeowners with low mortgage rates are less likely to sell, benefiting new home builders.
New vs. Existing Home Sales
- Existing home sales have declined significantly, similar to the Great Recession.
- New home sales compensate for this decline, presenting opportunities for home builders.
Geographic Trends
- The pandemic accelerated migration towards the Sun Belt.
- This led to increased construction and some price corrections in certain markets like Austin.