thanks hp'ers for the link... If some desperate homedebtor wanted to attract some media attention, they really would put out a sign like this one. Start their home out at say $300,000 (that is really worth $250,000) and take it down $1,000 a day. Imagine what the neighbors would think!
October 11, 2006
Do I hear $224,000?
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Anything short of 10% reduction is a normal market. When prices drop 20-40%, then we have something. Our market is slowly stalling but Buyer's are everywhere. The real estate market is still very strong. We haven't had the influx of "investors" like other markets. Just normal people needing a roof. Average home prices are $180k. The McMansion market is taking a beating. They're down 10% from the high in mid-05.
Back in December I proposed the $1000/day reduction to my realtor for a house I had on the market in LA County. She didn't agree and I finally sold the home in March after reducing the price considerably. I called this daily price reduction a reverse auction and still think it would be a good idea, if it were marketed properly to a wide enough audience.
News update for New Jersey !!!
Kara Homes in Bankruptcy After Mortgage Payment Offer (Update3)
By Kathleen M. Howley and Eric Martin
Oct. 9 (Bloomberg) -- Kara Homes Inc., the New Jersey builder known for so-called McMansions, filed for bankruptcy after $250,000 discounts failed to lure buyers.
The closely held East Brunswick, New Jersey-based company sought Chapter 11 protection in U.S. Bankruptcy Court Oct. 5, saying it owes $296.84 million to lumber, concrete, electrical, plumbing and woodwork companies while holding $350.18 million in assets, primarily unsold houses and land. One property for sale is the 6,319-square-foot, five-bedroom ``Buckingham'' model with a three-car garage, listed for $1.5 million in Freehold, New Jersey.
U.S. housing demand is flagging after five record years, swelling the inventory of unsold homes. Almost half the people who sign contracts with builders are canceling before the house is finished, forcing companies to sacrifice profit margins by offering freebies to attract new buyers, according to James Hughes of Rutgers University, in the same town as Kara's headquarters.
``There could be many similar filings in markets glutted with single family homes,'' said Gerard Cassidy, managing director of bank equity research for RBC Capital Markets in Portland, Maine. ``Kara is already at the table. We expect more people to come to dinner, the question is, how many more?''
Patrick Turner, general counsel for Kara, didn't return a message left on his answering machine requesting comment. The company was started in 1999 by Zudi Karagjozi, a former singer and musician, and how has 50 employees, according to idEXEC Inc., an Internet database. Kara was named to Inc. magazine's list of the 500 fastest-growing private companies in 2004 and 2005.
Incentives
Kara began advertising in 2005 that it would pay the first year of mortgage bills for buyers -- what it called its ``On the House'' program, and said in January it would continue the offer this year. In August, Kara began advertising discounts of $20,000 to $246,000 for so-called ``spec,'' or speculative houses built without a buyer under contract, calling it its ``Home Spec- tacular'' program.
More than half of U.S. homebuilders, 55 percent, are offering incentives such as free mortgage payments, fireplaces, hardwood floors or garages, up from 37 percent a year earlier, said Gopal Ahluwalia, director of research at the National Association of Home Builders in Washington, citing a survey he conducted last month.
Four percent are giving away cars and another 4 percent are handing out vacations, Ahluwalia said.
``Incentives are just falling straight to the bottom line and taking away from the profits,'' said Daniel Oppenheim, a homebuilding analyst for Banc of America in New York. As a group, homebuilders will see profit ``fall by half,'' he said.
Sales of new homes in August fell 17.4 percent from the same month last year to 1.05 million at an annualized pace, up from a three-year low of 1.009 million in July, the Commerce Department reported on Sept. 27. There were 568,000 new homes for sale in August, the second-highest on record after July's 570,000.
`Coming Soon'
Kara is selling homes in 29 developments in New Jersey towns such as Edison, Monroe, Lakewood and Manalapan, and lists four communities as ``coming soon,'' including Heather Glen in Stafford, New Jersey, according to its Web site. Homes listed for sale are priced between $324,227 and $1.5 million.
The U.S. median price for a new house was $237,000 in August, falling 1.3 percent from $240,100 a year earlier, the government report said. That's 7.8 percent below the 2006 high of $257,000 in April, and marks the first year-over-year drop in the monthly median new-home price since 2003.
New-Home Sales Decline
Measured annually, new-home sales probably will slide to 1.07 million this year from a record 1.28 million in 2005, the biggest decline in transactions since 1990, and the median U.S. new-home price may fall for the first time since the 1991 recession, when it dropped 2.4 percent, according to Douglas Duncan, chief economist of Mortgage Bankers Association.
Profit at Toll Brothers Inc., the largest U.S. builder of luxury houses, fell 19 percent in the quarter ended July 31 from a year earlier, the first decline in four years, as revenue slid to $1.53 billion from $1.55 billion, the builder said Aug. 22. Hovnanian Enterprises Inc., New Jersey's largest homebuilder, said Sept. 6 that profit in the quarter ended July 31 tumbled 34 percent.
Miami-based Lennar Corp. said Sept. 8 that net income in the quarter ended Aug. 31 fell 39 percent to $206.7 million. KB Home and Beazer Homes USA Inc. reduced their profit forecasts last month as demand slumps.
The Standard and Poor's Supercomposite Homebuilding Index of 16 stocks slid 29 percent this year through Oct. 6, after averaging 49 percent gains in each of the past three years. The index rose 17.02 points, or 2.8 percent, to 636.97 points at 1:15 p.m. today.
U.S. sales of new homes have dropped in seven of the past 20 years, including a three-year slide that ended in 1991.
Price Declines
Price declines are more rare. In data going back to 1963, the only new-home price decline in addition to 1991 was in 1970, when the median slid 8.6 percent to $23,400, according to the National Association of Home Builders.
Federal Reserve policy makers held the U.S. benchmark rate at 5.25 percent last month, citing their concern that declining home sales are slowing the economy.
``Moderation in economic growth appears to be continuing, partly reflecting a cooling of the housing market,'' the Federal Reserve said in the statement on Sept. 20 that kept the rate unchanged.
Each time the Fed has stopped raising rates for more than one meeting in the past 25 years, the next move has been a cut, according to data from the Mortgage Bankers Association in Washington. Reduced rates would make some mortgages more affordable and provide some help to homebuilders, Duncan said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ajY74Kg6RI7o&refer=home
If,like around here, they have no reason to sell, the neighbors would be amused at the seller’s innovation. If they did have a reason to sell(underwater flippers,) they would be mad as hell!
I have an Idea to sell a home (if you need to get out) Set up a slot machine in your front yard $1 per spin when the lucky person hits the 3, 7's they win the house. Could be a pretty good payout if the stars are all aligned.
Bork,
We'll let the folks in Reno and Las Vegas try this idea first.
the slot machine idea is good. the bad thing is that if one wins, he/she will take possession of the house and the optionARM that goes with it. LOL
Man, I just don't see how this company (Kara) could be so mis-managed. You KNOW they made a HUGE FREAKIN KILLING over the past five or so years, so how could they have stayed so indebted? How could they not have seen the slow down coming and adjusted accordingly? Are they brain dead idiots? Is Mike Tyson the CEO?
Average home prices are $180k.
WHERE? Not Chicago, Not SF, Not SD.
6,319-square-foot, five-bedroom ``Buckingham'' model with a three-car garage, listed for $1.5 million in Freehold, New Jersey.
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That mortgage at 6.25 is $9,235!!!
There are not that many wealthy lawyersa nd doctors out there. Sorry.
Regarding the initial post- in normal times the neighbor would have said the seller was crazy and just wasted 50 days on nothing when he knew well enough to initially price at 250K.
Now, all a seller needs to do is price at 2000 levels and their home will sell.
Ever been to Freehold NJ
What a shit-hole. That stupid circle they used to have on Highway 9.
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