[Hat tip to M for forwarding more great junk mail!]
Homebuilders are feeling motivated to put you in a new home. So much so, in fact, D.R. Horton’s CEO said earlier this week:
As I’ve said to all our salespeople, if a buyer is warm and has a pulse, we want to put them on paper.
D.R. Horton isn’t the only one who’s decided to be aggressive. Check out this Lennar ad offering up to $172,000 off on a home that was $523,378:
Homebuilders have tried everything from large cobrokes to free granite countertops to get buyers in the door, but it hasn’t been enough to move inventory. Maybe, just maybe, homebuilders are getting desperate enough to try something novel–lowering the price.
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Wow that is a pretty big drop. Has anyone seen similar flyers for any of the N. Scottsdale builders?
I think the trend will continue for awhile.
Astrozombie-
Most of the flyers are for “hot deals” in Maricopa, Johnson Ranch, Casa Grande, and West Valley points that I think are just east of the California state line. Lots of condos and out of state flyers as well. Also lots of condo ones.
Most of them aren’t worth posting, but tell me a lot about how well these areas are holding up. [I sure appreciate having these forwarded to me guys!] I posted this one because I thought discounts this large from a public builder were worthy of note.
This is like telling a false truth to consumers. X dollar “incentive” is the same as saying “houses are loosing their value” by X dollars. Offering this incentive is like selling a product, with a value of five dollars, for seven dollars and fifty cents, and then offering two dollars and fifty cents as an “incentive”. This misleads consumers into thinking the product is really worth seven dollars and fifty cents.
I knew Phoenix real estate was inflated but I did not realize how big they are building these houses. The electric bill for the 3,811 sq. foot model must be difficult to pay for the average family.
>>This is like telling a false truth to >>consumers.
Very perceptive.
These houses aren’t the great deals they are made out to be, if this is the only price people are willing to buy them at!
The builders are not idiots. They wouldn’t sell for less than what they thought the market was dictating (although they *would* try to sell for more).
It was a grueling day and I looked at 32 houses in Scottsdale and Fountain Hills. There are five that I think are close enough to where I might place an offer, and the rest are just plain nuts, especially those in the 85254 zip code. I’ll let you guys know if I put any offers out and how it goes.
The large builders are writing down the book value of the lots they hold. They have to be careful because they are publicly held. Soon they will sell some of their excess lot inventory at a loss to other builders like the 4 who have just entered the Phoenix market. The new builders then hold the land at a lesser value. They will build and offer homes for less than the original builder, pi$$ing off everyone who bought from the original builder in the early stages of the subdivision. This will cause many people to lose large amounts of equity. THE REASON BUILDERS OFFER INCENTIVES RATHER THAN PRICE DROPS IS TO AVOID CLASS ACTION LAWSUITS FROM EXISTING HOMEOWNERS.