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SD Realtor.
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July 9, 2007 at 10:59 AM #9476July 9, 2007 at 11:45 AM #64797
Stu949
ParticipantTo a buyer, $10,000 usually won’t make or brake a deal. To the builder, it gives the impression that prices are increasing – “get in before you’re priced out!”
I do know from inside sources that some builders put sold signs on houses in their developments to give the appearance that the product is moving.
A price increase can be another tactic. If someone who has been looking at 4S for a while (going once a month to see if there are more price drops) sees that prices have now changed course, then this could scare some people into buying. I actually think it is a decent tactic that many people would fall for… They’re hope is to scare the people who have “fallen in love” with their homes – as we’ve heard before, NEVER fall in love with a home.
As jeeman stated, he’s checking prices, but he isn’t “in love.” I laugh on the inside when I hear the same crap in south Orange County. I actually know some executives for a big public builder in Irvine. They’re budgeting for 15% price decreases over the next year – what they think is a worst case. If it comes to it, they’ll be able to drop 15% and still make a profit – albeit a slimmer one. I’ve been tracking some new developments in Talega (a “master planned” community in San Clemente). I recently saw a house that was priced at 1.6 million in February currently listed for 1.1 million as of three weeks ago. Still over priced? Yes, but not a bad adjustment – 1.6 was pre subprime implosion, and 1.1 is the current price. I haven’t checked back to see if it has sold.
Just some thoughts…
July 9, 2007 at 11:45 AM #64857ParticipantTo a buyer, $10,000 usually won’t make or brake a deal. To the builder, it gives the impression that prices are increasing – “get in before you’re priced out!”
I do know from inside sources that some builders put sold signs on houses in their developments to give the appearance that the product is moving.
A price increase can be another tactic. If someone who has been looking at 4S for a while (going once a month to see if there are more price drops) sees that prices have now changed course, then this could scare some people into buying. I actually think it is a decent tactic that many people would fall for… They’re hope is to scare the people who have “fallen in love” with their homes – as we’ve heard before, NEVER fall in love with a home.
As jeeman stated, he’s checking prices, but he isn’t “in love.” I laugh on the inside when I hear the same crap in south Orange County. I actually know some executives for a big public builder in Irvine. They’re budgeting for 15% price decreases over the next year – what they think is a worst case. If it comes to it, they’ll be able to drop 15% and still make a profit – albeit a slimmer one. I’ve been tracking some new developments in Talega (a “master planned” community in San Clemente). I recently saw a house that was priced at 1.6 million in February currently listed for 1.1 million as of three weeks ago. Still over priced? Yes, but not a bad adjustment – 1.6 was pre subprime implosion, and 1.1 is the current price. I haven’t checked back to see if it has sold.
Just some thoughts…
July 9, 2007 at 11:51 AM #64799Alex_angel
ParticipantThey are going to increase these homes a little at a time in hopes that no one notices and then by labor day they will have the LABOUR DAY SPECIAL, $25-50k off or incentives thrown in plus a free plasma. It is amazing how dumb people can be. Pardee last year had 15 homes for 2 months unsold. had a labor day special where you get a free $2000 TV and sold about 10 homes. I cannot believe that people are soooo stupid.
Most people will look at the ad in the UT and say WHAT!!!! this is a great deal not realizing that they could have bought the home for the same price last month.
July 9, 2007 at 11:51 AM #64860ParticipantThey are going to increase these homes a little at a time in hopes that no one notices and then by labor day they will have the LABOUR DAY SPECIAL, $25-50k off or incentives thrown in plus a free plasma. It is amazing how dumb people can be. Pardee last year had 15 homes for 2 months unsold. had a labor day special where you get a free $2000 TV and sold about 10 homes. I cannot believe that people are soooo stupid.
Most people will look at the ad in the UT and say WHAT!!!! this is a great deal not realizing that they could have bought the home for the same price last month.
July 9, 2007 at 1:13 PM #64812gn
ParticipantStu949 is absolutely right. The builders know that there is a fair number of “fence sitters” out there (this is not surprising b/c even in a downturn, there are still buyers).
Many of these fence sitters are not entirely convinced that the market will crash b/c home prices have been going up for so long that it’s hard to imagine that they will come down significantly (most people operate based on recent memories).
The builders know that these fence sitters just need a “little push”. And increasing the price a little bit just might do the trick.
The real problem: for every new home being sold, there is a re-sale home NOT being sold. Builders are simply stealing sales from resellers who bought investment homes in 4S & need to sell b/c prices have gone down & the ARMs are resetting.
At some point (2008), a good percentage of the houses bought as investments in 4S will end up as REOs. That’s when the lenders who own the REOs will compete with the builders to sell. That’s when it will get interesting.
July 9, 2007 at 1:13 PM #64871ParticipantStu949 is absolutely right. The builders know that there is a fair number of “fence sitters” out there (this is not surprising b/c even in a downturn, there are still buyers).
Many of these fence sitters are not entirely convinced that the market will crash b/c home prices have been going up for so long that it’s hard to imagine that they will come down significantly (most people operate based on recent memories).
The builders know that these fence sitters just need a “little push”. And increasing the price a little bit just might do the trick.
The real problem: for every new home being sold, there is a re-sale home NOT being sold. Builders are simply stealing sales from resellers who bought investment homes in 4S & need to sell b/c prices have gone down & the ARMs are resetting.
At some point (2008), a good percentage of the houses bought as investments in 4S will end up as REOs. That’s when the lenders who own the REOs will compete with the builders to sell. That’s when it will get interesting.
July 9, 2007 at 2:03 PM #64828fromnj
ParticipantI hope you are right.
By the way, does labor day speical continue to the end of year? In general, are they going to add different incentives towards the end of year?
July 9, 2007 at 2:03 PM #64888ParticipantI hope you are right.
By the way, does labor day speical continue to the end of year? In general, are they going to add different incentives towards the end of year?
July 9, 2007 at 2:06 PM #64832rb_engineer
ParticipantIn 2006, Oct/Nov had the largest incentives/reductions.
July 9, 2007 at 2:06 PM #64892ParticipantIn 2006, Oct/Nov had the largest incentives/reductions.
July 9, 2007 at 2:13 PM #64834ParticipantThanks rb_engineer.
So, do you know by chance how the largest incentives/reductions to the new home affected on the prices on existing homes in 2006? Is it positively correlated?
I am talking about the RB market, but it might be applied to all regions.July 9, 2007 at 2:13 PM #64894ParticipantThanks rb_engineer.
So, do you know by chance how the largest incentives/reductions to the new home affected on the prices on existing homes in 2006? Is it positively correlated?
I am talking about the RB market, but it might be applied to all regions.July 9, 2007 at 3:33 PM #64847Participantfromnj,
Hmm. I don’t think I’m qualified enough to answer that…
I can try though!
In Carmel Valley, which I follow, deviation between builders and resale are pretty small. I don’t really track the RB market but there seems to be a bigger gap there, which probably means the market is less active and it will take longer for them to correlate.
Right now is definitely not a good time to buy since the after effects of spring bounce is still lingering.
July 9, 2007 at 3:33 PM #64907Participantfromnj,
Hmm. I don’t think I’m qualified enough to answer that…
I can try though!
In Carmel Valley, which I follow, deviation between builders and resale are pretty small. I don’t really track the RB market but there seems to be a bigger gap there, which probably means the market is less active and it will take longer for them to correlate.
Right now is definitely not a good time to buy since the after effects of spring bounce is still lingering.
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