Homebuilders' Robust Incentives to Buyers are Telling Indeed

Includes: DHI, PHM, TOL
by: Barry Ritholtz

Whenever I hear anyone say home prices are holding up up, I have to laugh. That's like saying the NY Knicks are undefeated (except for their losses). From CNN Money over the weekend comes this:

David Seiders, chief economist for the National Association of Home Builders says 75 percent of the nation's builders and developers are offering incentives.

Those incentives range widely. "Developers will upgrade appliances, put in a Garland range or a Sub-Zero refrigerator," says Diane Saatchi, a vice president with the Corcoran Group who specializes in Hamptons properties...

The Associated Press reported last week that a new San Diego condo development, Atria, was giving away plasma TVs and $5,000 home renovation gift certificates. Other popular options include fancy kitchen cabinets, granite countertops and marble baths.

Some buyers, however, may just want money - and those deals abound. "Price cuts are averaging 5 percent to 6 percent," Seiders says, "and 30 percent of all the large builders have cut prices in at least some of their developments by 10 percent or more."

So while home prices may look the same, the net to the builder has changed dramatically -- as the freebies listed below make clear...

Move.com offers a list of homes in Duncan, MI with incentives ranging from $6,000 to $25,000. Incentives as robust as $20k on $194, and $25k off homes as low as $294k home -- a healthy 10% discount.

Calculated Risk is highlighting a Pulte Homes $99,000 giveaway on homes priced from $300K+ to $700K+.