It sounded hokey and desperate, like something the mattress stores do. Hovnanian Enterprises, the big New Jersey-based home builder, slashed prices at its developments across the country this past weekend. An LA Times piece on Saturday said a similar blowout sale by Standard Pacific homes had attracted only a trickle of would-be buyers on Friday. That sale, dubbed Mission: Possible, aimed to sell 200 homes over the weekend in Southern California. It seems to have worked. Standard Pacific said on Monday that the number of homes it sold in July and August was up 20%, driven largely by a doubling of sales in California.
Hovnanian’s gambit seems to have been successful as well. The company slashed prices as much as 25% or $240,000, according to the Associated Press. On Monday, Hovnanian announced it had sold 2,100 homes over the week, more than twice what it had anticipated and almost as many as it had sold in the entire previous quarter. The company now says it has one of the lowest inventory levels in its history.
Hovnanian typically sells more expensive homes to mid-level and higher-end homebuyers with an average FICO score in the 720s, according to the investment research firm Gimmie Credit. “We believe the move was smart and timely,” says Gimmie Credit analyst Vicki Bryan. “With children settled back in school, parents traditionally start shopping this time of year to get a new home in time for the holidays.” Company ceo Ara Hovnanian told Hot Property the success of the sale shows there are buyers our there for homes. They just need to assured they are getting a good deal.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.