Lew Sichelman
To reach out-of-state buyers, Arizona homebuilder Camelot Homes recently ran a “Fly and Buy” incentive that covered traveling expenses. In Texas, meanwhile, Highland Homes offered buyers a free generator – just in time for hurricane season.
Both of those promotions are now over, but they are prime examples of how far homebuilders are going these days to move product. Many are still offering exceptional deals, especially on homes that are move-in ready.
“While many builders ramped up promotions in the spring and summer, fall is often the best time for buyers to find deals,” according to BUILDER, a trade publication.
Ali Wolf, chief economist at Zonda, a new-construction consultancy, said that while “there’s nothing new about incentives,” today’s discounts “are more pervasive across projects and the dollar amount as a percent of home prices continues to rise.”
Even so, sales are not always living up to expectations. Wolf said that some markets are underperforming despite the giveaways.
Free Upgrades, Mortgage Buydowns
According to the National Association of Home Builders’ latest tally, two-thirds of builders everywhere were offering some kind of incentive in August.
For the most part, they are throwing in free upgrades, helping with closing costs, discounting prices or buying down their buyers’ mortgage rates. Some are offering to delay buyers’ mortgage payments, match any future price reductions or buy back the house at its original price.
As compiled by the trade journal, here are some of the best deals from builders across the country.
K. Hovnanian Homes is proffering generous price cuts on select “quick move-ins” in various communities. In one Florida property, the discount is almost $130,000.
LGI Homes is offering a zero-down incentive at several communities.
Taylor Morrison is offering no-interest payments for the first seven months at several markets.
M/I Homes is offering to buy down buyers’ mortgage rates, pay their closing costs and provide free design upgrades.
Responding to Shaky Economy
On a market-by-market basis, said BUILDER, companies are responding to high loan rates, high prices and a shaky economy with “a growing array of incentives to help buyers move forward.” Here are some local offers, as compiled by the magazine.
In Atlanta, Toll Brothers is discounting prices from $25,000 to $56,000 at several projects. Lennar has dropped prices from $25,000 to $100,000 at two locations. Buyers at Beazer Homes receive $50,000 to spend any way they like. And Smith Douglas Homes is offering a low-rate mortgage with no closing costs.
In Austin, Texas, for houses priced in the mid-$300,000s, Lennar has lowered prices by up to $73,000 in three locations. And for houses priced from the high $200,000s, Meritage Homes has slashed prices by as much as $75,000 on move-in ready houses. KB Home has discounted prices from $25,000 to $35,000 at several communities in the city’s higher-end market. Toll Brothers will trim up to $112,000 off its $1 million houses at one location.
In Charlotte, North Carolina, Lennar has sheared prices by up to $55,000 in numerous communities. And in one neighborhood, David Weekley Homes is giving buyers 1 percent of the house price to use as closing costs, plus $20,000 as a discount or for closing costs.
In Dallas, Beazer will buy down mortgage rates for four years, while KB Home and Lennar are offering price cuts up to $60,000. Elsewhere in Texas: In San Antonio, PulteGroup will give quick-move-in buyers a 4.25 percent mortgage rate, as well as half off design options (up to $30,000) and 6 percent toward closing costs.
Deals Won’t Last Forever
In Orlando discounts here span a wide range, the magazine reports. At one Beazer location, for example, buyers who can close right away can combine price concessions with closing-cost offers up to $73,000.
At one grand opening in Raleigh, North Carolina, Profile Homes is giving the first 13 buyers in one community $13,000 for closing costs, plus a washer, dryer, refrigerator, window blinds, backsplash and luxury vinyl plank flooring on the first level.
In the Washington, D.C., area, Richmond American Homes has slashed prices “on a few homes” at one location by $100,000, while Lennar is slicing prices at its townhouse property in Charles County in suburban Maryland by up to $71,500.
By now, your eyes have probably glazed over. But deals like these aren’t going to last forever, especially on houses ready for immediate occupancy. Homebuilders are getting more cautious, said economist Wolf.
They’ll continue to open new projects, she said, but “they’re not going to be as aggressive” about starting houses until they have a sales contract in hand. She calls it “a big lesson learned from past cycles.”
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.
