With new home building permits falling to their lowest level since 2020 last month, a real estate expert warned of a “double blow” that would price the average American into an affordable home and applauded a Florida attempt to fix it. problem.
“It’s a double problem. It’s a lack of demand and declining demand because buyers and consumers can no longer buy or are priced out of the market what they could get last year. And then on the development side, Don Peebles, Chairman and CEO of Peebles Corporation, said on Tuesday, “Mornings with Maria.” “Credit markets are essentially freezing in the program,” he said.
Peebles’ comments came as new home construction in the US fell again in November as high mortgage rates combined with widespread inflation continued to cool demand and the once-fever housing market.
Housing starts fell 0.5% last month to 1.427 million units per year, according to new Commerce Department data released on Tuesday. Construction applications, which measure future construction, fell 11.2 percent year on year to 1.34 million units compared to October. Building permits for detached houses, which have the largest share in house construction, also fell by 7.1% to the lowest level since May 2020.
HOMEBUILDER EMOTIONS FALL IN 12 MONTHS IN DECEMBER
According to the real estate expert, two key market factors triggered this demand collapse.
“At this time, Americans have been hit with cash out of their pockets by runaway inflation, and now this overreaction of skyrocketing interest rates has stripped them of their purchasing power in their two biggest purchases. As Peebles argues, they will “make it in their lifetime” home and car purchases.
Peebles expanded on that idea last year, claiming that a home buyer on a $500,000 budget can now buy a home for only $250,000 and there is currently “nothing to buy at this price point.”
“Interest rates price most people outside of the market or price them up on a product they don’t want to buy,” Peebles said, “and I think that will continue.”
Last Friday, Republican Florida Governor Ron DeSantis passed legislation aimed at fixing the state’s troubled property insurance system. The bill seeks a $1 billion reinsurance fund, reduced litigation costs, and forcing some customers to leave a state-created insurance company.
Florida has struggled to stabilize its state insurance market since 1992, when Hurricane Andrew ravaged Homestead, destroyed some insurance companies, and left many remaining companies in fear of writing or renewing policies in the state. The risks for carriers increase as climate change increases the strength of hurricanes and the intensity of rainstorms.
“Something has to be done about these out-of-control insurance costs. But at the same time, carriers are taking a big risk — you take a big risk to insure in Florida, you take a big risk to insure in California.” “I think, DeSantis, this move will focus on helping the average person afford to live in their home.”
The real estate expert said the state of Florida had no choice but to intervene, arguing that expensive insurance costs would prevent people from moving there.
“Fewer people will move to Florida if they can’t afford their homes or they can’t afford insurance because the lenders will need it. Consumers are hit hard, so I think they have no choice,” he said. “If they don’t intervene, taxpayers will have to pay for it in another way. I think it was a very smart move.”
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Peebles urged other states to take Florida’s lead and predicted a housing “recovery” once inflation was under control.
“If you look at it from a government perspective, there’s no real policy on how we’re going to deal with some of these. Americans need homes. They need a place to live,” said Peebles Corporation CEO. “As for housing, we’re short on every major market, and you have an affordable housing crisis in most major cities in the country.”
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Megan Henney of FOX Business and The Associated Press contributed to this report.