Monday, January 30, 2006

Sacramento New Home Incentives Double

CNNMoney reports that homebuilder incentives in Sacramento doubled in value in the fourth quarter. This bit of information follows consistently bad news for homebuilders over the last few months, previously reported here, here, here, and here.

Everybody wants something for nothing, and as housing markets slows, homebuyers are starting to get just that. Sellers, reluctant to drop home prices, have been finding creative ways to move product. The trend is especially evident among developers and homebuilders who have to act much more decisively than individual homeowners who have the option of sitting tight.

Some recent freebies include trips to Las Vegas, home-entertainment and security packages, furniture store gift certificates, golf club passes for a year -- even swimming pools, according to Greg Paquin of the Gregory Group, a market-research company.

The Gregory Group reports that in Sacramento, Calif., the value of incentives by homebuilders in the fourth quarter averaged $8,965, double the prior quarter. Incentives include price discounts, upgrades, and promotions. "Builders don't want to hang on to standing houses -- they have to pay their bills, financing, and taxes," said Paquin.

Steve Melman, a spokesman for the National Association of Home Builders (NAHB) reports that sales incentives have become the rule among its membership -- 56 percent feature non-price incentives. Some 16 percent of NAHB members are now offering to absorb financing points, up from 13 percent six months ago, and 33 percent are paying at least some closing costs, up from 27 percent.

But it's the non-price incentives that attract the public's fancy and 40 percent of the builder's NAHB surveyed are offering optional items at no extra charge to help close deals. A year ago, only 28 percent were doing it...


Lander said...

Thanks to a reader for this link.

Happy Renter said...

Sales have plummeted I can't find the article but sales in sac county dropped 57% last month and west Sacramento suffered a 95% drop in sales. Healthy Price reduction such as those they are seeing in Florida and Vegas should start in a few months. Homebuilders are taking a big hit now but sales are typically slow this time of year. When it doesn't pick up in the spring serious cuts will begin.

Happy Renter said...

Heres is the article.

HighSierraGuy said...

And I'd been thinking we finally ran out of stupid people. At best, a 2-3% non-cash discount to move a new house? Woo hoo, sure gonna hit it big on my free trip to Las Vegas.

Let's see what the incentives relative to the list price look like in another three months. Centex has just started the 100k drop; who blinks next?