Elizabeth Rhodes hits us this morning with a fun little morsel: Developers dangle discounts, toys to lure home buyers. (I wonder why this article wasn’t in the big weekend real estate section? Hmm… Edit: It would appear that the answer to that question is that they were saving it for the front page [pdf].)
Puget Sound-area new-home developers, motivated by an increasingly soft real-estate market, are resorting to something they haven’t done in years. They’re enticing buyers, like Matt Orlando, with big TVs, motorcycles and other inducements.
The deal sweetener that eased Orlando into his first home was a $3,000 credit toward closing costs on a one-bedroom condominium in Veridian Cove, an extensively refurbished new conversion in North Seattle.
The first year’s homeowners dues, at $197 a month, also were waived.
“I feel like I won the lottery,” says the Shoreline Community College instructor. “They were basically giving me $5,000 to move into a beautiful place I could afford.”
Incentives started appearing in late summer and are the best they’ve been in more than a decade. Indeed, until this year, builders could count on selling many new homes before they were even built.
Now there’s a four- to 13-month inventory in King and Snohomish counties of new houses, town houses and condominiums available, according to New Home Trends, a Bothell data-research firm. That’s spawned a goody-laden battle for buyers.
In other words, they’re dropping prices without actually “dropping prices.”
If this story sounds familiar, it’s because the exact same thing has unfolded in other markets all across the country over the last few years. It’s one of the surest signs that a housing market is transitioning from “boom” to “bust.” The builders are no dummies, they know that it is time to get out. The only problem for them is that they’re all trying to get out at the same time.
This will be interesting to watch unfold.
(Elizabeth Rhodes, Seattle Times, 10.29.2007)