Friday, September 28, 2007

Bad News That's Even Worse Than It Looks

by Tom Bozzo

It's not exactly news that the house sales data released this week stank on ice, especially the new home sales. What's remarkable is the magnitude of the fire sale that's on. This is from an account of the results from builder Lennar Corp.:
During the quarter, Lennar offered buyers $46,000 per home in incentives to move unsold homes, up from $35,900 in the year-earlier period.
So, while their reported average price decline was 6% (to $296,000), the effective selling price net of incentives fell more than 11%. Nevertheless, units sold were down 41 percent.

Amusingly, on Lennar's average sale price of $296,000, the incentives have about the same magnitude as $5,000 on the hood to move a gas-guzzling truck-based SUV, only the SUVs are more marketable.


My near-neighbors--spurred on, perhaps, by the last two sales on our half of the street setting block records--have now listed their house at an offer price that is about $30K greater than my "let's become renters" price.

Did I mention it's significantly smaller (both size and plot) and marginally less desirably located than ours?

The bubble may be deflating, but some areas still have room to pop.
Sold for near their price in one day.
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