Glut of Homes Sparks Incentives, Auctions
RENEE MONTAGNE, host:
And all the bad news in the mortgage market recently means homebuilders are starting to sound more like car dealers. They find themselves asking customers, what will it take to put you into this house? With a glut of unsold houses already on the lot, some builders are going to new lengths to move the merchandise.
NPR's Scott Horsley explains.
SCOTT HORSLEY: Sales of pre-owned homes hit a five-year low last month, and the National Association of Realtors says even if no more for sale signs went up, it would take 10 months to unload the current inventory. That's a tough environment for companies building new homes, like Lennar, which reported the biggest loss in its 53-year history yesterday. So homebuilders are getting creative - offering upgrades, plasma TVs, and when all else fails, even dropping the price.
This Saturday, one of the nation's biggest homebuilders, D.R. Horton, plans to auction off several dozen unsold condos in San Diego. Abra Ryder(ph) just toured some of the models.
Ms. ABRA RYDER (Resident, San Diego): They're very nice. They're very well appointed. They've got granite countertops and stainless appliances. And they look real nice.
HORSLEY: Not long ago, D.R. Horton was asking $310,000 for a one-bedroom condo here. And most of the units in the complex sold for that much or more. The starting bid in the auction is about half that list price: $149,000. That got the attention of would-be buyer Mike Martin.
Mr. MIKE MARTIN (Buyer, Condominium Unit): Absolutely. An opportunity to get into at a better price point, potentially.
HORSLEY: Homebuilders are often reluctant to cut prices for fear of angering customers who paid retail. But analysts say if the price cuts succeed in attracting buyers, other builders may follow suit.
Scott Horsley, NPR News, San Diego.