Aldo Svaldi for The Denver Post wrote a great story last week highlighting the problems builders are facing with selling homes today. According to John Covert at Zonda, “up until April, the share of contracts getting cancelled in metro Denver was under 15%. But, by the end of July cancellations had soared to 45%. More recently, around a third of contracts were failing.”
Why have cancellations increased so much? First, it takes them on average 10 months to build a new home and sometimes as long as 18 months. Second, their lenders don’t offer long-term locks. This surprises me since many big builders own their own mortgage company as I would have thought someone would have had the foresight to offer long-term rate locks even if it costs a lot of money.
