Advertised Price Cuts: $96,000, $103,000, $150,000 -- even $221,000

From the Sacramento Bee:

On a wintry weekday in California's fastest-growing small city, Bryan Petersen steps from a sales office to discuss how eager home builders are to make any kind of deal with people like him. "They're asking $453,000 and offering $60,000 in incentives," he says, standing outside a 2,700-square-foot model where flags of a giant corporate builder whip in the wind. He nods back toward the sales rep and grins. "And she said, 'Make me an offer.'
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It's no surprise in Lincoln to see advertised price cuts on new homes of $96,000, $103,000, $150,000 -- even $221,000. The price-cutting battles reveal how pressures on big public companies to sell extra stock can also impact individual sellers and small-time speculators -- even entire counties. Real estate experts blame Lincoln's price wars for fueling a 55 percent drop in new home sales in Sutter and Yuba counties.

Some analysts, in fact, say it was the slowdown in Lincoln that signaled the end of the housing boom regionally when, in late 2005, it became the area's first market to buckle under the weight of too many new homes similarly sized and priced.
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But the competition among big corporate builders has had a number of collateral effects. Speculators who missed the the window to "flip" their investments now find them nearly impossible to sell.
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For the 510 Lincoln homeowners who had "for sale" signs in their yards in early December, competing against Wall Street home builders like Centex, D.R. Horton and Lennar is difficult. "A lot of investors who got into these homes last year made a big mistake, and I think a lot of them will be forced into bankruptcy," says Henry Ung, an Elk Grove real estate agent who represents two investors and bought an investment home in Lincoln himself. "These investors cannot compete with the builder. It's very tough for us."
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In 2004 and 2005 investors bought up to 17 percent of the homes sold in Lincoln, according to DataQuick Information Systems, a La Jolla-based property researcher. Now, buyers such as Petersen drive past their "for sale" signs because it's cheaper to buy a newly built home.
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At City Hall, officials acknowledge possibilities that 2006's slowdown may cost Lincoln its fastest-growing small city status. But thousands more new houses are still a sure bet, says community development director Rod Campbell.
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Petersen says Lincoln Crossing sales agents tell him "there's been a lot of sales" in December. So far he's not committed. "We're like a lot of people on the sidelines waiting to see what the market is doing," he said.