Builder dropping home prices - dropping values?

[Keith "Baby-Face" Lutz]

Originally Posted by FLtoNC

I live in a community that is about 25 - 30% built out. Of the homes completed within the last several months, almost none have closed. In other words, the buyers either did not qualify in the end or they bailed. Now the builder is dropping prices on those homes drastically for quick sales and many of the homeowners in our neighborhood are in a frenzy. Most of these homes are closing for over $100K below prices that homeowners living here paid for their homes, and the builder has also dropped home prices a lot to complete the 1st phase of the neighborhood. They claim that prices in phase 2 will increase, but I don't see how. I know the market has softened, but I can't believe values have gone down that much. Just curious about your thoughts on this, especially to realtors out there. I will note that I am not sorry that I bought my home, nor do I plan on selling anytime soon, but it is disheartening to see the values going down so much.

When people were flocking here, the demand for homes could hardly be kept up fast enough by builders, hence the inventory. Now that people are not able to sell there homes in other places and all this inventory is sitting, the builders need CASH, so they drop the prices. (BTW, John Wieland is having a huge blowout sell off starting Friday!)

The 2nd Phase will not be built with so much inventory, and less contingencies. The builder probably already purchased the land, so they have to charge X amount, to return a profit. Homes will go up slower in phase 2, but probably will be slightly more.

Remember, Charlotte - if we get rid of all this inventory from builders, then re-sales will also boom (because some people need homes right away), and this slight dip in our market could turn around. On the other hand, everything is very volitiale right now. Keep your fingers crossed.

My personal prediction is, Charlotte will feel the least amount of pain compared to most other markets. Look at our commercial vacancy rate, it is LOWER than NYC. This is good, more business comes here, the more jobs come here, the more people and homes come here. Where else are they going to go? Keep paying taxes of $14,000 in places like CA or NY. Smart people stay ahead of the curve.

[rmorton]

Originally Posted by SunnyKayak

It was reported on CNN that home values will drop at least another 15 percent.

If you are looking long term then dont worry about anything.
If you are looking for a short sell or was planning on selling in 2 years then you might not get what you expected.

I have learned not to buy a home in early phase of development that is not complete due to I have notice the better bargain is the last few houses in that phase.
Also the last few homes set the selling price of a home of that size in that community.

If the builder has already started phase 2 then I know it will be forever before I will see any apperciation that I desired in that community

It depends on the community. I have seen community prices increase from phase 1-2 by 20% then 2-3 20% and by the time it was finished phase one prices were up overs 50%. In another community less than 2 miles away just the opposite, so all subdivisions are not the same. The market is tanking but the builders in my community are continuing to raise prices and the homes are continuing to sell. Its still LOCATION. The last few houses in a phase are usually better bargains than the houses in the new phase but not less than if you bought in the beginning of the old one. But every subdivision is different. For the long term if you are in a well maintained sudivision you will see appreciation over the long term.