As housing market cools down, some buyers bailing out

WASHINGTON — As the U.S. housing market cools, builders say more people are walking away from contracts and from tens of thousands of dollars in deposits.

Nationally, some big builders are beginning to report cancellation rates upward of 25 percent.

“Ten to 15 percent of people deciding to cancel is not going to be unusual most of the time,” said Jonathan Dienhart, director of research for Hanley Wood Market Intelligence, a home-building research firm. “It’s just that in the last couple years — when we had unusually high demand, where people could just buy a property and flip it — there were fewer cancellations. It’s not a cakewalk anymore.”

When a housing market is hot and prices increase, as they did dramatically over the past five years in many areas, cancellations are rare, and builders generally aren’t concerned because they can typically sell the units at higher prices.

But if the market is slowing, as it has been this year, builders might need to add incentives, such as upgrades and price cuts, to move their product. (Read More)

Source: The Seattle Times: Real Estate

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