Home builders throw in price cuts, incentives

[NVMojo]

October 27, 2006

WASHINGTON "" After offering incentives ranging from fancy kitchen upgrades to free swimming pools to move a glut of unsold homes, builders finally decided they needed to get serious about cutting prices.

The result was the biggest decline in median new home prices in 35 years. And analysts are predicting more price cuts to come for both new and existing homes as sellers deal with near-record levels of unsold dwellings.

The Commerce Department reported Thursday that the median price for a new home sold in September was $217,100, a decline of 9.7 percent from September 2005.

That was the lowest median home price in two years and the sharpest year-over-year decline since December 1970, providing dramatic evidence of the slowdown in the once-booming housing market.

The latest new home statistics available for Washoe County showed sales of new homes fell 30.5 percent in Washoe County, to 660, during the second quarter ended June 30 compared with 2005's second quarter, according to a report by Reno-based Real Estate Marketing Network Inc., which tracks new homes sales in the area. The company does not track the median price.

The median price is the middle point, where half sell for more and half sell for less.

The price decline for new homes followed a report Wednesday that prices in the much bigger existing home sales market also dropped on a year-over-year basis in September by 2.5 percent, the largest decline in records going back nearly four decades.

more...

http://news.rgj.com/apps/pbcs.dll/article?AID=/20061027/BIZ03/610270378/1071/BIZ

[Monkeyman]

1. Housing Market is breaking look out stocks

[Warpy]

4. No more easy money in the housing market will

drive MORE money into stocks, not less. Some people will have to cash out if they bought at the peak of the market and their house value falls below the outstanding mortgage, but that'll be the exception, not the rule.

[oasis]

2. Not to worry, Bush's tax breaks will fix everything.

:eyes:

[pooja]

3. And that is still too high.... When interest was down, lots of people

turned homes quick to make money... Real people weren't living in these homes... they were turning them and turning up the prices. Real people can't affor 217,000 and also afford property and insurance. They are already starting to fall here... about 20,000 more and I will buy.

[NVMojo]

7. us too ...until then ...we rent

[Systematic Chaos]

5. And the ripple effects from this will look like a tsunami.

Less homes being sold
Less homes being built
Less construction workers needed
Less subcontractor work needed
Less building materials needed
Less manufacturing required
Less paper pushers needed at realty offices, loan offices, banks, insurance companies, etc...
Less retail sales
Less retail personnel
Less discretionary spending for restaurant food, fast food, luxury and fancy electronic items
Businesses closing down

And this all equals
FAR MORE UNEMPLOYED AND BANKRUPT PEOPLE

[Virginia Dare]

8. My question is...

what happens to all the illegals that were imported here for the construction business, they pack up and go home?

:shrug:

[WestSeattle2]

6. This WILL snowball into the rest of the economy....

because so many Americans live way, way, way beyond their means. How do they do it? On borrowed money. Where do many of them get it? Home equity loans. Home values plummet, no more home equity loans....which means no more new cars, no more vacations, no more new computers or Ipods, (that they couldn't afford in the first place but never the less), all of that borrowed money both by individuals, AND the REPUBLICAN federal government, will all come home to roost in the not too distant future. Talk about a house of cards.

For those with foresight and a habit of saving however, the next couple of years will be a grand opportunity to swoop in and pick up foreclosed properties for pennies on the dollar.

Keeping up with the Jones's using borrowed money is a foolish pursuit. Working people using "interest only" loans to buy hugely inflated 4,000 sq. ft. McMansions are playing with fire, and many are going to get burnt.

My father drilled the following into us: Live simply, save, invest, and prosper. Live big by borrowing, and you'll be begging....

BTW, he was financially independent before his 50th birthday, so I tended to listen to him........

[cliss]

9. Message from CLiss to all Home Flippers:

~~Get your butts in gear and unload your "Investment" Properties. Your little Nest Egg is about to take a dive off a Cliff.~~




Article after article here at the DU points to the same thing: Properties are going to start to take a nose dive. Property flippers typically have portfolios and they have to make monthly payments on them, either fixed loans or other types. Once housing prices start to go down, their margin gets smaller and smaller. If they have to sit on these for extended periods, unable to sell them, the shit starts to hit the fan.

Time to get out now.