Whoa. The New YorkTimes has a story today about US interest rates and the influence of the Chinese government and its economy.
However, the disturbing part of the story is where the reporter talks about Pulte Homes. They are one of America’s largest home builders. They buy land, or buy options on land. Then they build once they have purchase contracts in hand.
Last year, in Las Vegas, there was a sudden downturn in sales. The market is terribly overheated, and people got scared once sales started to level off, fearing it was the start of a nationwide trend. It wasn’t. Developers cut prices, and houses started selling again.
Extremely disturbing is this statistic: when sales cooled, Pulte was seeing cancellations of home purchases that amounted to 75 percent of new sales. Yikes! Obviously, those 75 percent were buying as investors hoping to flip the properties. They got out the minute it looked like things were going bad.
This might only be bad for home builders. Or it might be bad for everyone, due to a ripple effect.
Boston is a different world, because there is no such spec building going on. Again, though, what happens elserwhere could affect us.