Loading ...It looks like some major home builders are starting to run “Sales” to generate interest in their subdivisions. This is not a new tactic, but it certainly is an indication that things are not well in the new home market. First there was Hovnanian Enterprises, who last weekend announced (with much publicity and fanfare, I might add) a 3 day sale at their subdivisions in 19 states across the country, including California. The sale effectively reduced prices by as much as $100,000. There is no truth to the rumor that if you use your Macy’s card for the purchase, you get an additional 10% off.
Not to be outdone, KB Homes just announced a 24 hour sale. They are offering a flat $20,000 this weekend only for home buyers to spend as they choose…. a purchase price reduction, upgrades, closing costs, or mortgage buydowns. This applies to homes that are complete or near complete.
Lennar Homes, a major national home builder, recently slashed the price of it’s standing inventory anywhere from $100,000 to up to $200,000 on their homes in Tassajara Valley in Danville. These homes are in the $900,000 to $1.4 million range.
Even Shappell, the “Oakland Raiders” of home builders who are legendary in their tight-lipped and uncooperative approach to business, are dealing on their new home standing inventory.
All of this highlights one problem with buying a new home. The builder sets the price of the home, and controls the data (often throwing in incentives, etc), so a buyer never really knows what the market value of the home is. For example, when you buy a new home for $900,000, and the builder gives you $100,000 of incentives, the value of that home is not $900,000. In fact, the value of the home might not even be $800,000. Because the value of the home is what the resale market is willing to pay for it. When you buy a resale home, the buyer can find out exactly how long it has been on the market, what the price has been, and can get an idea of the demand for that home. Builders put up little “Sold” and “Reserved” buttons on a map. Now of course, these are new homes, which is always desirable. But keep in mind you still have to put in landscaping and window coverings, so be aware of what your total investment is. It very well might exceed what the market value of the home is. Now, if they would just give me that extra 10% off for using my Macy’s card, I might even buy one.
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Everyone Loves a Sale!