Homebuilders offer incentives, discounts

With the end of the year quickly approaching, Valley homebuilders are hustling to rid themselves of excess homes and hit sales projections by offering incentives and price discounts to potential buyers.

Builders are working to meet the sales numbers they predicted at the beginning of 2007 — trying to stimulate activity during the slowest time of year when people are focused on holidays, not home shopping, said John Fioramonti, senior managing director at Meyers Builder Advisors in Scottsdale.

“It’s a good time to buy,” he said. “(Builders are) going to be competing with each other like crazy for the next 90 days.”

In the past week alone, national builder Pulte Homes and Scottsdale-based Cachet Homes had major sales campaigns.

Pulte’s “Monster Sale” touted select homes with upgrades, landscaping and appliances, as well as zero closing costs and 5.875 percent, 30-year fixed rate financing. Cachet Homes had an offer for 10 days, which ends today, that included a two-year lease on a Lexus and $1,200 gas card with the purchase of an inventory home.

Cachet has about 100 inventory homes — some speculative and others the result of cancellations by people who couldn’t sell their current homes, said Diane Byrne, vice president of marketing.

The Lexus program has increased traffic and interest, Byrne said, though she didn’t have sales numbers. A few people have taken the more than $14,000 credit instead of the Lexus lease, she added.

Cachet, like many builders, also has lowered prices by tens of thousands of dollars throughout the course of the year. The company’s Web site has the original and current sales prices for homes.

“We’re making it easy for people to find what they want,” Byrne said.

Builders are offering typical incentives, such as carpet, cabinet and appliance upgrades, said Jay Butler, director of Arizona State University’s Realty Studies Department.

Some will buy a customer’s existing home under specific conditions if the customer can’t sell it. Others have contingencies where the buyer can walk away from a deal free and clear if the customer’s old home hasn’t sold.

But not every subdivision is offering incentives because market conditions vary by area, Butler said.

“A lot of the outlying areas are stagnating,” he said.

The price difference between new and existing homes also varies by region.

In Gilbert, September’s median existing home price — where half cost more and half cost less — was $276,000, compared with the new home median of $273,000, Butler said. But in Queen Creek, the existing home median was $318,000 versus a new home median of $225,000.

Real estate agents and home owners say the ability of builders to dramatically slash prices often makes it tough for nearby existing home sellers to compete.

In a healthy market, the Valley’s existing home market should have roughly 30,000 homes for sale, and right now it has about 20,000 too many, said Ken Peterson, vice president of sales and marketing for Shea Homes. At the same time, builders need to unload inventories, Peterson said.

In September, Shea started its Web-based “Click & Save” program, aimed at moving its inventory homes that could close escrow by year’s end. The builder sold 26 homes last month, a little more than half of which came from the “Click & Save” program. It has another 28 to go.

Shea was conservative and built very few speculative homes in 2005 and 2006, Peterson said.

There needs to be a balance between the resale and new home markets, he said.

“I don’t think either one is at fault,” he said. “We’re in this together.”