A real estate expert has issued a warning to prospective home buyers over the next ten years, saying that Americans face a ‘catch-22’ when it comes to real estate.
TikToker @hardmoneyguy claimed in a video that due to all-time high-prices ‘across the board,’ those who bought their homes before 2020 are very unlikely to sell, leaving new buyers with little choice but to purchase newly built homes.
The creator, who posts videos about real estate, said that there will be a homebuilding boom, but builders will ‘cut corners’ and be more focused on quantity than quality.
He warned that if buyers do purchase one of these homes, they should take extra precautions and negotiate to have a five or 10-year builder’s warranty written into their contract.
‘We are in a definite catch-22 when it comes to real estate in America,’ he said in the video posted in October which has amassed more than 557,000 views. ‘This problem is not going away.’
‘I don’t care what interest rates do. Yes, in theory, if interest rates come way back down some people will sell their homes,’ he said.
‘But keep in mind if interest rates go down and supply is not drastically increased it means that the home prices are going to go up.’
The creator added that this is ‘simple supply and demand’ and said that this is the ‘same exact reason why home prices now haven’t gone down’.
TikToker @hardmoneyguy has issued a warning to prospective home buyers over the next ten years, saying that Americans face a ‘catch-22’ when it comes to real estate
According to the creator, home prices across the country have gone up about 4 percent this year, and home sales are at the lowest level since 1995.
‘The only reason that’s the case is because the demand is not there. The demand is not there because the interest rates are so high,’ he said.
The TikToker claimed that this will lead to heavy government incentives for more homes to be built – but they are likely to be poorly built.
‘It’s gonna create a lot of jobs, it’s gonna create economic activity, it’s not a bad thing,’ he explained. ‘But what happens when you heavily incentivize homebuilders – you get quantity over quality.’
Due to the demand, homebuilders would ‘cut corners like crazy’, he claimed.
He alleged that homebuilders are already doing this, but ‘there’s a lot more of that coming.’
Many viewers agreed with him in the comment section of the video.
‘A few weeks ago, I saw a home inspector post where he showed a new build’s garage was made out of literal CARDBOARD! Builders already cheaping out now, just think what they’ll do with deregulation,’ wrote one.
The creator warned that an increased demand for homes will cause construction to become cheaper and for workers to start ‘cutting corners’ more than America has already seen
‘But what happens when you heavily incentivize homebuilders – you get quantity over quality,’ he claimed in the video
On average, new builds can cost 10 to 20 percent more than an old home, according to real estate broker Shelley Cluff
‘[I] refuse to buy new construction. This is going to be so much worse too if they cut regulations as expected,’ said another.
‘Bought my home in 2003…I’m planning on dying in my home. Not only general affordability, but quality of materials is an issue,’ wrote another.
In 2022, Realtor.com listed the reasons why an old home may actually be more preferable than a new build.
According to Shelley Cluff, a real estate broker and owner of Park Place Homes in Michigan, new builds typically cost 10 to 20 percent more than an old home.
Older homes were ‘built to last’ using better quality of materials and techniques, she said, potentially providing a stronger, warmer and quieter home.
TikToker @hardmoneyguy advised anyone who thinks they will buy a home in the next few years to be extra vigilant.
He recommended having a five or 10-year builder’s warranty written into any contract, instead of the typical one-year warranty.
‘Push for higher builder’s warranties. Protect yourselves,’ he said.
