# Cheap mortgages are something to hang onto

By [Brandon Donnelly](https://brandondonnelly.com) · 2023-08-17

financial-times, homebuilders, housing, john-burns-research, new-condo-sales, pulte, real-estate, toronto-condos, urbanation

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If you really need a new home, then I guess [this makes sense](https://www.ft.com/content/4b30a535-9458-4e97-a763-b637c26693af):

> _We thought rising mortgage rates would crush the homebuilders, and bet against Pulte in the FT stockpicking contest. But the exact opposite happened: high rates froze the existing house market by giving homeowners a huge incentive not to move — their irreplaceable cheap mortgages. That left new homes as almost the only game in town for anyone who really needs to buy a home. Pulte has been one of the best- performing stocks in the S&P 500. Never pick stocks, even in a stupid stockpicking contest, on the basis of superficial research._

And [here's a chart](https://www.ft.com/content/2f0053eb-e1de-4623-9786-7043679672d2) that supports this argument (new homes as a % of total single-family home inventory, including resales):

![](https://storage.googleapis.com/papyrus_images/91b74673cb0294bba620fedf60494b9a.jpg)

It's an interesting nuance.

But it's certainly a different story here in Toronto with new condominium sales. [According to Urbanation,](https://www.urbanation.ca/node/263) in the first half of this year, the Greater Toronto Area sold 6,727 new condominium homes. This is down 59% compared to 2022, and represents the slowest first six months in a decade.

In this case, higher rates have dramatically slowed the market.

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*Originally published on [Brandon Donnelly](https://brandondonnelly.com/cheap-mortgages-are-something-to-hang-onto)*