Was reading some of the stock news and I saw an interesting thing in an article about a major homebuilder losing another 80 million in the last quarter.
“The company also said it would slash prices on homes across the country beginning late next week to try to sell off excess inventory.”
A check of their website and they are having a 72 hour sale starting next weekend, I wonder how low they are looking at going and if the others are going to follow suit. The typical 30-40k in incentives isn’t going to get rid of their inventory nationwide in a weekend, this might be interesting. They have six tracts in San Diego County, somebody go scout it and report back.
In after hours trading their stock is up because of the announcement that came in after the market close. Here’s a quote from another article
“To try to boost sales, the company is offering a nationwide three-day sale beginning Sept. 14. Hovnanian will offer deep discounts in each of its 449 communities.
Alex Barron, senior research analyst at Agency Trading Group in Wayzata, Minn., said slashing prices to reduce high inventory should help the company improve its cash flow. “Right now the game is who can cut the prices the most,” he said. “They have a lot of debt that they need to service and in order to service that debt they need to have some cash coming in the door.”
I think this will ripple and it will ripple quick, I went to a different builder’s development yesterday and they had a note on the door saying they were closed for a meeting for half the day, looks like the rest of the builders are going to have to figure out how to keep up.
Same thing happened last year with many publically traded builders. Summer is over and its time to get the standing inventory off the balance sheet by year end. The best deals of the year in 2006 came from builders doing this last year in September. Expect the same this year.
last summer…that was before the credit meltdown. Are lenders still doing no down 100% financing. I wonder how many buyers have a down and can get into the discount prices.
How do you think the “price slash”? Will it work or not?
I registered in the Standard Pacific Home website. Their representative called me right away. I asked what kind of incentive or price drop SPH will bring to the table to achieve their “Mission Possible”. She said SPH paid millions of $ to buy down interest to 5.38 / 30 yr fixed. I asked about price drop, she said probably not too much.
Fine prints from the Standard Pacific website. How many do you think that they’ll sell in San Diego? This is a joke of a promotion.
*The 30-year fixed interest rate of 5.375% (5.966% APR) has a maximum loan amount of $417,000. Based upon a sales price of $438,948 with 5% down payment, the monthly principal and interest payments are $2335.08. Monthly taxes, HOA, mortgage insurance and hazard insurance are additional and are not including in the above payment. Interest rate, loan program, sales price and payments are estimates only and are subject to change without notice. Restrictions may apply.
They don’t want the price correction because it sets the bar farther back when things do recover, and because it burns their previous buyers harder.
Of course, the buyer is still getting less for their money because that buydown is a sales concession of value – it effectively reduces the price being paid by the buyer. The only party that really benefits is the County Assessor.
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