Weakening Real Estate Market
Real Estate has not hit bottom yet and there is not even a glimmer of light at the end of the tunnel. But there is no mistaking the slowdown as impatient sellers, reluctant buyers and home builders step back to reevaluate a serious market adjustment.
Many builders market numbers have fallen to a 52-week low and some are attempting to renegotiate their more recent land deals. The slowdown is national with sharp declines in the southeast, southwest and northeast (including New Jersey).
Toll Brothers (a Pennsylvania based company) has reported a 37% decline in the mid-atlantic region (including Pennsylvania, Delaware, Maryland, and Virginia) as well as Chicago, Las Vegas, northern California and Florida. Nationally, Toll Brothers is experiencing a 48 percent decrease in new home contracts for the last quarter and a cancellation rate that has more than doubled from a typical 6-8 percent to 18%.
Another Florida developer is offering paid club fees to the tune of $90,000 (covers golf ranges, swim and fitness facilities) with an added enticement of no maintenance fees for 30 months. This is to keep present owners at bay, by not depreciating unit value. You may have heard of "buy the house get a new car" in the garage incentive. It's happening in Michigan. One New Jersey builder is offering a large discount and encouraging agents to bring their buyers with a large commission.
Where and when will things stablize? Who can really predict? But those that are making the attempt are estimating 6 months to 2 years. Only time will tell the true story.
Real Estate has not hit bottom yet and there is not even a glimmer of light at the end of the tunnel. But there is no mistaking the slowdown as impatient sellers, reluctant buyers and home builders step back to reevaluate a serious market adjustment.
Many builders market numbers have fallen to a 52-week low and some are attempting to renegotiate their more recent land deals. The slowdown is national with sharp declines in the southeast, southwest and northeast (including New Jersey).
Toll Brothers (a Pennsylvania based company) has reported a 37% decline in the mid-atlantic region (including Pennsylvania, Delaware, Maryland, and Virginia) as well as Chicago, Las Vegas, northern California and Florida. Nationally, Toll Brothers is experiencing a 48 percent decrease in new home contracts for the last quarter and a cancellation rate that has more than doubled from a typical 6-8 percent to 18%.
Centex (Texas based company) is offering "employee pricing" - 5% discount up to $20,000. Pulte Homes (Michigan based company) offers free heat for 6 months, a 42" plasma television, and free window coverings up to $5,000.
A 2-year lease on a Dodge Dakota pickup is a Detroit developers offer to hesitant buyers. Interested in a buy-back plan? That's the incentive of a Miami developer. Purchase one of his condos at a 10% discount and he will buy back the unit at a 12% markup in 18 months. Decide to keep the unit, you will ante up the $10,000 discount. Willing to purchase a spec home in Arizona and you can reap $70-100,000 discount.Another Florida developer is offering paid club fees to the tune of $90,000 (covers golf ranges, swim and fitness facilities) with an added enticement of no maintenance fees for 30 months. This is to keep present owners at bay, by not depreciating unit value. You may have heard of "buy the house get a new car" in the garage incentive. It's happening in Michigan. One New Jersey builder is offering a large discount and encouraging agents to bring their buyers with a large commission.
Where and when will things stablize? Who can really predict? But those that are making the attempt are estimating 6 months to 2 years. Only time will tell the true story.
Best advice: Looking to make a deal . . . . . . . . ask for upgrades rather than discounts.
posted by Helene Ashukian at
8:50 PM
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