In a Lynnwood Journal puff piece that reads more like a sales ad than a news article I found these interesting anecdotes:
Local lenders, such as Golf Savings Bank, are offering incentives, such as $1,000 off closing costs for certain new home communities, like Edmonds Cascade Cottages.And local developers, such as Puget Sound Homes of Everett, are extending generous buyer’s incentives for purchases of homes into January, to spur sales activity during a typical slower time of the year. However, as the market heats up again after the 15th of January, these buyer’s incentives may go away.
Realtor Rick Horst, from the Everett office of Windermere Real Estate, represents Puget Sound Homes and Bellrose, a community of 28 single family homes located at the north end of Mill Creek. According to Horst, buyers at Bellrose can choose between a 2007 Ford Mustang, with a $23,000 MSRP, a $17,000 buyer bonus for use in closing costs and/or down payment, or having their first six months worth of mortgage payments paid by the developer.
…
One example of this [builder incentives] is the Acadia community of homes in Silver Lake, currently being offered for presale through John L. Scott Real Estate. Listing Agent Paula Hovander believes builder D R Horton will extend some portion of the buyer bonus offered in December, when the presale campaign was launched for their community of 36 single family homes. A total of seven homes were sold in December, with a $10,000 buyer bonus offered through DHI mortgage as an incentive to quick start presale activity.
Aren’t these the kind of things that builders do when they are having a hard time selling at current prices? If the local housing market is as “healthy” as some would have us believe, why would homebuilders be resorting to bribes to get people to purchase new homes? Not having been shopping for a hew home lately I couldn’t say how common this is becoming, but the fact that it’s happening at all is still more evidence that things are slowing around here.
I kind of wish that we had a local blog that followed new single-family homes the way that Matt over at Urbnlivn follows condos. It would certainly help give us a better idea of how much the market is softening.
(Jolene Anderson, Lynnwood Journal, 01.08.2007)
I would so totally jump at the opportunity to amortize the cost of a Ford Mustang over the length of my loan LOL
Incentives like these are basically price reductions without having to list the homes with a ‘price reduction’.
Like most places in the country, that’ve already begun this ‘incentives’ game, they’re finding that they’re not working. The main reason is that its not about the benefits and added bonuses, its about price.
People flat out aren’t able or willing to leverage into an overpriced home.
Next stop: Price drops
looks like Seattle is indeed a year behind. the bust is here.
OMG! Free faux stainless steel appliances!!??
Time to go out and get that half-million-dollar option arm.
:)
Maybe I am just an elitist, but I think anyone who says “Ooh! Free car!” when buying a house is an idiot. The cynic in me says that the builders think this too. That leads to the conclusion that the builders think only idiots would buy their houses.
You know the builders are negotiating deals to get those Mustangs well below MSRP.
And if you take the credit towards closing costs, I expect that there is a lot of negotiating leeway in those costs that will be more difficult to negotiate away with that huge credit.
Maybe I am just an elitist, but I think anyone who says “Ooh! Free car!” when buying a house is an idiot.
Oh come one a 30 year car loan, what could go wrong :-D
I would so totally jump at the opportunity to amortize the cost of a Ford Mustang over the length of my loan LOL
Sure, some buyers might lack the financial knowledge to understand that this is in fact equivalent to taking a 30 year car loan, but for anybody with a basic understanding of finance this could be a good opportunity. If you were going to buy a new car anyway, chances are the rate on your mortgage is lower than the rate you would’ve gotten on an auto loan. If you pay off a portion of the mortgage equivalent to the price of the car over 3 to 5 years, then why not?
anybody with a basic understanding of finance this could be a good opportunity
This is not a good opportunity because:
a) You are paying MSRP. You should be paying below invoice.
b) Car loans rates can easily be less than mortgage rates especially if you use the dealer’s finance company. Auto makers consider total profit when selling a car. They are willing to give you lower rates because all they are really doing is moving profit between the interest payments and the initial sales price.
Paying over 30 years only changes the rate at which your principal is payed down. That car ends up being much, much more expensive than paying it down over five years.
Also, who wants to live in a neighborhood where all the houses look the same and everyone is driving the same model car? That is like “Stepford Wives” creepy.