Yesterday’s post looked at a Beazer ad from the Arizona Republic. Beazer listed both an old price and a new price. Beazer did not define old, however. I was surprised when a local realtor (who prefers to remain anonymous) kindly let me know. Here’s the comment:
Beazer has not updated any of their prices since January ’06. almost all builders have made "adjustments" 2-6 times this year. (The examples sent to me showed these "adjustments" were all down) Yesterday I randomly checked UNHS for Gilbert developments for price movement- soft landing my %$#%!! Even at these lower prices builders are STILL offering generous incentives. In fairness, not all builders are discounting prices-yet, some prefer to keep pricing high and offer HUGE incentives
My realtor friend and I discussed the Brigata spec at Morning Sun Farms- The ad gave an old price of $329,078 and a new price of $269,078 (the old price, then, must have been from January, given what my friend reported).
Here’s the chart showing the increase in the base price on the Brigata-
You can see the rather meteoric rise in price of the Brigata model. The price went from $170,490 in Sept. 04 to $282,490 in Jan. 06- a 65.7% increase in a matter of 16 months. Since then, however, there has been no movement at all on the base price.
That brings us back to our Brigata spec. If the base price was $282,490 in January, and our spec was $329,078- that means it has $46,588 worth of options. The sale price on this spec is $269, 078- that’s $13,412 below the current base price and $60,000 in total. According to the listing, the discount goes from $60,000 to $70,000 if you use Beazer’s lender, and they also promise a 8% cobroke for the realtor who talks you into this deal
My realtor friend was concerned about the havoc caused by builders who overbuilt trying to cater to a hot investor market. Not only has this dumped a lot of inventory on the market, but it affected the quality of the homes as well:
When investors determine what is built in a neighborhood they devalue it greatly. They simply want the most square feet for the least amount of money, hence the ungodly supply of low optioned 3000 SF homes on the market.
I especially appreciated this comment from my friend– This crash (soft landing???) is the best thing that could have happened in the SE Valley. In a buyer’s market builders have to OFFER MORE!
The builders have started to offer more- but the sales still aren’t there, and the summer season is winding down. Consumers can expect to see greater consessions from builders in the next few months. According to Jay Butler of the Arizona Real Estate Center, "Right now, if you want to live in Pinal County, it’s economically better to look at new homes." And this may just be the beginning–for those who are willing to wait, the deals should only get better.
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A big problem exists for buyers who must sell their existing homes to move up (or over…depending on what they’re moving from). For these folks (myself included) you have to figure out what you can REASONABLY sell your existing home for. I still see a a lot of sellers in this situation who are having a tough time discerning what “reasonable” means. I’ll give them a hint: It’s NOT what your neighber sold for last winter or even last month. Only after taken the likely selling price for your existing home into consideration can you determine how good a deal the discounted home is.