Housing fallout leads to better deals for some future homeowners

JACKSONVILLE, Florida. – A local real estate agent says new home prices are falling and it’s because of the ripple effect of COVID-19 and supply chain issues.

During the pandemic, house prices rose, mortgage rates were around 3%, and more houses were built. But a backlog of building materials slowed completion and move-in dates.

Jonathan Daugherty, a St. Johns County real estate agent, said the real estate spinoffs are leading to better deals for some future homeowners. Future homeowners who qualified for a 3% mortgage may not qualify for a 6% rate, but their home is already built, so after the fallout from the deal, builders are trying to sell homes for thousands of dollars cheaper.

Daugherty, who has been a local realtor since 2009, recently spoke with News4JAX about how he sees a change in real estate.

“Now interest rates are up to 7%,” Daugherty said. “So now that 12 to 16 months later, having made the contract, the houses are now complete and the lenders are coming back and saying, ‘Well, that 3% is now 6 ½ to 7%’. And now the payment is $1,500-2,000 more than they originally thought.

The future owner can no longer afford to buy the house and, in some cases, the buyer also loses his down payment.

“Without any fault of the builder and no fault of the buyer, the transaction cannot proceed,” Daugherty said.

But the house still has to be sold. The banks want the money they gave to the builders in advance to build the house. The house comes back on the market in the hope of being sold at a lower price to a new buyer.

“An incredible opportunity for buyers,” Daugherty said.

Daugherty said a home that originally cost $500,000 now sells for nearly $475,000, creating an opportunity for a new owner — if they can afford higher interest rates.