Well, here we are. Homebuilders across the U.S. are staring down the barrel of an impending disaster. In just 26 weeks, a staggering $81 billion in shareholder value has been wiped out. The average loss per home sold? $254,000 in shareholder equity. That’s a 33% drop in share value for just 20 builders. It’s not just a bump in the road—it’s a crash.
This is more than just a temporary setback. The real estate market is officially in crisis mode. Housing affordability is now worse than it was during the last bubble. The median American household is now on the hook for 47% of their income just to afford the median-priced home. That’s a record, and it’s painful.
Even more alarming? The number of people searching for “sell house fast” on Google has hit its highest level in 12 months. When people are rushing to sell their homes, it’s a sign the market’s foundation is starting to crack.
Then there’s the growing issue of delinquency rates. Homeowners with government-backed loans are starting to fall behind on their payments at alarming rates. FHA loans are currently at an 11.03% delinquency rate, and Veterans Affairs loans aren’t faring much better at 4.7%. This is a red flag, as these rates have breached pre-pandemic levels. That’s a sign the foundation under the market is crumbling.
And yet, there are those who want to brush this off. Critics are starting to compare FHA delinquencies to the subprime mortgage crisis, claiming these government-backed loans will be the next disaster waiting to happen. While it’s true that FHA delinquencies are rising, it’s not quite the same story as 2008—yet. The reality is FHA loans make up just 12% of the overall mortgage market, so it’s not as catastrophic as the subprime mortgage crisis was.
But here’s the problem. We’re still looking at a lot of uncertainty. The majority of mortgages today are in good shape, but that could change fast. The real danger comes if we start seeing late payments surge on conforming loans—those backed by Fannie Mae and Freddie Mac. Or even worse, portfolio loans held by banks. If those start to falter, we’re in real trouble.
Now, let’s talk about Orlando. For the first time since 2010, the area is seeing its highest housing inventory levels. As of January 2025, there were 11,697 homes on the market—a seven-month supply. This is a huge shift for Orlando’s housing market, and it signals a return to a more stable, pre-pandemic market.
But here’s the twist—more inventory doesn’t always mean better prices. With homebuilders already taking a massive hit and affordability at an all-time low, this glut of inventory could push prices even lower. If demand continues to falter, homebuilders could find themselves trapped with too much unsold inventory on their hands, exacerbating the crisis.
The bottom line? Homebuilders are in for a rough ride. Prices are already high, affordability is slipping, and if delinquencies start to rise on conforming loans, we could be looking at another crisis on the horizon. It’s a tough time to be a builder—or a homeowner.
Sources:
https://x.com/MrAwsumb/status/1893861066192351609
https://x.com/charliebilello/status/1893861280575811610
https://x.com/VladTheInflator/status/1893831196062171245
https://x.com/unusual_whales/status/1894008627373146530
https://www.wesh.com/article/orlando-housing-market-highest-inventory/63875521
https://x.com/TKL_Adam/status/1894018353187971493
https://www.rand.org/pubs/commentary/2024/09/the-us-housing-crisis-what-americans-need-to-know.html
https://hbr.org/2024/09/the-market-alone-cant-fix-the-u-s-housing-crisis