"Waiting for the Price Bubble to Burst"

The Tracy Press looks at slowing new home sales, rising inventories, and the ineffectiveness of incentives.

To woo an ever-dwindling number of well-heeled buyers to developments like Mossdale Landing in Lathrop, builders of new homes are offering incentives such as swimming pools or $20,000 in free upgrades.

In the Bay Area, some developers are even offering new cars, said Susan State, owner of State and Associates in San Ramon and publisher of the State Report, a monthly insider's look at the Bay Area and Central Valley housing markets. The one thing they have yet to offer is lower prices, State said.

Phase 5 will come soon enough, just you wait.

"If pricing doesn't come down, we're going to have houses that don't sell," said Sid Reams, a real estate agent with Manteca-based Wilson Group. There are 12,000 new homes planned for the Central and Mossdale-areas of Lathrop, and that has agents like Reams concerned. In some cases, developers are offering incentives of $30,000 or more for upgrades like marble countertops and floor tiles or high-end kitchen fixtures, said Jim Muthart, co-owner of Coldwell Banker Crossroads in Lathrop.

But incentives are only a temporary solution to a deeper problem, Reams said. "Incentives can work in the short term," he said, "but you have to help buyers with lower prices and lower monthly payments. Prices have to come to at least 10 percent."

Reams said that he's not a "gloom and doom" guy, but he warned that prices are too high for new buyers and investors. Meanwhile, inventory is booming. There are more than 300 homes for resale in Manteca and 102 in Lathrop. People are waiting for the price bubble to burst -- or looking for cheaper homes, Reams said.