Builders have been heavily discounting prices hoping to lure buyers back to the market. Prices for brand-new construction in some communities are very tempting and even comparable to bank-owned foreclosures, which sell in “as is” condition.
The problem for builders is that many buyers these days feel that a bargain in real estate is a moving target as prices continue to fall. Some builders, such as Shea Homes and Reno-based Pacific West
Companies, are addressing the issue by offering price guarantees of up to three years, the San Jose Mercury News reported. That means if a developer drops the price for a home like yours before the last home in your subdivision is built, you can collect a refund for the difference.
Residents in the Thornton Grove Estates in Hamilton Township, Ohio might have benefited from such a guarantee. Some Thorton Grove residents recently complained to reporters at WCPO-9 News that new homes in the development are selling for about 20% less than they paid a few years ago.
“To take a $60,000 hit on a house that I bought three-years ago – it just isn’t right,” resident Kevin Bardsley told the television station.
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.