New home sales fell 8.5% in March, according to the Commerce Department. The vacancy rate for homes is at 2.9%, the highest level recorded since the Census Bureau started keeping track in 1956. Over 18 million U.S. homes were empty in this year’s first quarter. Sound like bad news?
Not everybody thinks so. There are those who believe that the bottom of the real estate market is either here, or will be here soon. The optimists, on whose side Topretirements rests, believe that the mismatch between inventories (still way too high), demand (pathetic), and prices (still too high in spite of very big reductions in some markets) will eventually be resolved and the real estate market will return to equilibrium.
The pessimists believe that news like the 32% decline in the median price of existing condos in the Bradenton-Sarasota market from March 2007 to March 2008 will continue well into the future, fueled by factors like baby boomers fleeing the suburbs for low tax sunbelt retirements.
In the meantime for any optimists out there, there are deals to be had. A number of developers are offering incentives, which include: guaranteed buy-backs, help selling your existing home (Erickson Communities), special prices, reduced interest rates (Lennar Corp.), and lots of “frees” (landscaping, granite countertops, finished basements, etc.). Shea Homes says they won’t offer incentives, but will offer lower no-haggle prices (e.,g.; like Saturn automobiles). Sellers of existing homes, faced with pages and pages of competition, know that they have to offer a deal to rise to the point of being noticed, so there are plenty of deals to be had there too. As always, cash buyers who are ready to sign a contract will get a better deal than a window shopping customer who needs a mortgage.
Of course there is always the difference between a come-on and real deal. So if you are tempted by an incentive, analyze it carefully to find out its real benefit (or get your lawyer or financial advisor to help). Go out and visit the property and ask questions of the neighbors and HOA (Home Owners Association). The bold and the brave can easily find deals – if they do their due diligence and are willing to be patient. Then time can tell if their instincts were correct or not.