July 21, 2006

WSJ: "Certain builders are slashing prices so much that it is making it difficult for rival builders to compete"

MSM is now covering the builder price slashing going on in the bubble markets. Remember, these builders can go much lower than Joe Homeowner, and they'll crush him on the panic to the exits. $100,000 off? No sweat. No down? No sweat.

Blood is in the streets, and it's getting worse. It'll be a race to the bottom from here on out.

As the nation's home builders struggle with big inventories, a surge in cancellations and a pullback in demand, many are aggressively offering discounts in high-profile promotion campaigns aimed at getting a dwindling number of home buyers into their sales centers.

Mr. Barron, who recently returned from a tour of the Florida housing market, says certain builders are slashing prices so much that it is making it difficult for rival builders to compete. He cites the South Fork community near Tampa, where Hovnanian Enterprises Inc. was selling homes in the low-$300,000 range while Lennar, 500 feet away, had slashed its prices for homes of a similar size to about $230,000.

The price cuts and incentives aren't unique to Florida. There are signs and ads for significant discounts in other previously hot markets such as Phoenix; Washington, D.C., and California.

Some builders, such as Centex Corp., had been offering 12-hour sales at some of its sales centers in California, where buyers would be offered as much as $100,000 off the price of a multimillion-dollar home if they purchase a home during the sale hours.


deDesertKnight said...

Here in the coachella valley,(ca) it has been reported that some very sexy r.e. agents are even having sexual experiences as incentives with clients thru close of escrow!!! At least that is what I've heard....seen any sexy agents lately? They might just ready to "put out" to close the deal

autofx in Phx said...

I have my eye on a Pulte development that is to my liking as far as location, floor plans, lot sizes, etc., and I'll post on Keith's blog from time to time if I see them sweetening their deals.

But I'm in no hurry to buy. When I do buy, it'll be when a lot of this idiocy has shaken out, so it could be a few years yet.

autofx in Phx said...

Oh, one little tidbit -- I've been watching a few houses I know well on Zillow, including the one I used to own, and I noticed a drop in estimated prices ("Zestimates") over the past week. It was in the 1% to 2% range. Not a very significant piece of data all by itself, but I've also been seeing steady markdowns on homes for sale in my immediate neighborhood, plus all the rumblings in the news lately, so it's all coming together now. It's just a question of how fast it unravels. This is all quite fascinating if one enjoys economic history being made on a grand scale, painful as all this will be for many.

Anonymous said...

Ouch, that's gotta hurt! But hey, a builder's gotta do what a builder's gotta do, right? Anyway, tell 'em to knock off another 100k on that POS and I'll think about it.

Anonymous said...

They need to knock off more in this area. Townhomes are selling at $250,000 for cookie cutters, and $800,000 for nice ones. I think the cookie cutters need to drop to $85,000 and the nice ones should be priced around $175,000.

This is Clearwater, FL near Tampa, BTW.

I'll wait until prices start to drop below $100,000 on all these condos and townhouses before I buy. I'll rent until the price is right!

Anonymous said...


This is so entertaining. I sure hope a lot of people lose their ass.

Anonymous said...

Hey Dear Autofx in Phx....

If I were you I would re think that Pulte Home. My background is in construction and the new homes that these corporate builders have been pumping out are so cheap that I even try to discourage people I don't like from buying one.

The latest trick to cheat new home buyers is using 2x3's instead of 2x4's in the second story.

If you really must buy the absolute best value is pre 1970's. Maybe not the best in style or the style you want. But it will last longer

Anonymous said...

Pulte Builders are the worst around. They are glorified thieves. Stay clear of them - hard to deal with and I am sorry I ever got involved with them. My best advice - run the other way from Pulte and Del Webb.