When D.R. Horton Inc., the second- biggest U.S. homebuilder, couldn’t sell the one-bedroom condominium in San Diego it listed for $349,800, the property was auctioned as a last resort for 37 percent less.
D.R. Horton, with annual revenue of about $11 billion, and Hovnanian Enterprises Inc. now face the worst choice in the worst residential real estate slump since the 1930s. They’re selling homes at any price they can get.
“It’s desperation time and some companies may not make it,” said Alex Barron, an industry analyst at Agency Trading Group Inc. in Wayzata, Minnesota. “At this point in the housing cycle, if you have too much debt, it’s hard to get out from under it.”
D.R. Horton of Fort Worth, Texas, overcame qualms about its image with the Sept. 29 auction of 56 unsold San Diego condominiums. The 200 bidders who filed into a tent on the grounds of the Doubletree Hotel in Mission Valley, California, needed a $5,000 cashier’s check to prove they were serious, said Steven Moran, an agent with Century 21 Award in San Diego, who attended with 11 clients.
“I ran the numbers and the condos sold for between 68 cents and 74 cents on the dollar based on the original asking prices,” Moran said.
A condo with an enclosed balcony and an indoor parking spot was originally listed at $349,800 and sold for $220,000, Moran said. D.R. Horton also threw in a washer-dryer and $2,500 toward closing costs, Moran said.
“Adding a credit toward closing costs still allows them to show the highest selling price they can,” Moran said.
