I just took some out-of-town buyers through Somersett. They’ve been watching the area for a while and are looking for a retirement home that they can move into five years from now and rent out in the meantime.
We started at the clubhouse and worked our way inward. A couple of appointments we had to scratch because the homes entered escrow. One is the $599K foreclosure across the golf course from me (finally). The other was a seemingly overpriced single-story in Copper Knolls with amazing views. At least things are moving, and it will be interesting to see what the final prices are.
We ended up at The Vue, where this weekend they’re having a blowout sale. On Thursday, Pulte had 13 homes to sell. As of this afternoon, they have only three. Pulte has once again moved a boatload of standing inventory in Somersett. The magic formula? Slash prices by $70K and give another $10K for closing costs. The price point that sells? Try $122 per square foot.
Sure, this is a cluster community, which means the homes are nestled in pretty tight, but the standard upgrades include slab granite countertops, cherry cabinets with knobs, stainless steel appliances, upgraded carpets and tile floors. You are getting a lot of bang for your buck here, this weekend only, starting at $259,990. To find comparable new home values, you’d have to go all the way out to Cold Springs or the very back of Spanish Springs. And yes, the yards would be bigger, but commute times would be longer, and the homeowner amenities do not not compare.
My clients thought hard about purchasing today, but in the end decided to wait for the next release because they really have their hearts set on one particular model. And even at its regular price of $160 per square foot, it’s a far better value than the $235+ per square foot used stuff we saw earlier in the day. These are clients who could spend more if they wanted, but are mindful of making the best investment possible. At these prices, Pulte is hard to beat.
These new, low prices can’t be good for all the flippers trying to sell in The Village.
17 comments
Diane,
You mean the builders are leading the market down?
You mean with 4,500 resale houses that did not sell last month, and who knows how many hundreds (thousands?) of new houses already built or almost built, prices are dropping?
Wow, who would have thought.
Let’s not delude ourselves here. Pulte has lowered the ceiling to $122 sq. ft. Anybody who thinks this price won’t be good past tomorrow is naive.
So where will Pulte be by January?
$100 sq. ft.? $90?
Can anybody estimate how many new houses there are for sale in Reno-Sparks?
Every week in the Saturday real estate insert of the RGJ, there is a list of all the new developments in Reno-Sparks. The last time I counted, which was a while ago, I think there were more than 80 new house developments.
If there are only 10 houses for sale, on average, at each of the 80 developments, that would be about 800 new houses. But drive through some of these projects and it is apparant there are WAY more than 10 houses ready to go at most of them.
20 houses each? That would be about 1,600 new houses.
30 houses each? That would be about 2, 400 new houses.
What REALLY is the amount of inventory we have in Reno-Sparks? Counting resale and new? I have a sense it is a WHOLE lot more than the almost 5,000 listed in the MLS.
Anybody?
“Pulte has once again moved a boatload of standing inventory in Somersett. The magic formula? Slash prices by $70K and give another $10K for closing costs. The price point that sells? Try $122 per square foot.”
Now that’s what I’m talking about! It won’t be long until the other builders follow suit. The flippers just got nuked. Hello new comps. $122 per square foot upgraded is a very good price this early in the game. And IMHO Somersett is, hands down, a far superior location to Spanish Springs or Cold Springs. Thanks for the excellent info Diane. I’m going up there tomorrow to look at the homes.
BB, Please tell them I sent you…
Diane:
Only YOU could pull off listing an extreme fixer upper barn on an acre of land for $800,000. Now I’m all about charm and diamonds in the rough, and I see the potential here, but $800k?! Holy cow! I mean, I love that place but that’s A LOT of dough for that old bag of bones. Is that commercial property?
WOW 122/sqft Such a great deal!! almost temps me to buy another house but I think with times like this CASH/EQUITIES are STILL king. And with the stock market performing the way it has been the last 2-3 years especially the last 6 months. My money isnt moving.
but speaking of investing into RE. Is anyone else here making a killing off SHORTING the homebuilder stocks? Lennar,hovnanian,pulte, just to name a few.
CHEERS!
$122 per square ft puts prices back to 2001 levels.
RE: “The price point that sells? Try $122 per square foot.”
What was the going price/sq ft at the height of the bubble, back in ‘05/’06?
“And with the stock market performing the way it has been the last 2-3 years especially the last 6 months. My money isnt moving.”
Um.. have you checked?
DJIA- 2 years:
http://finance.yahoo.com/q/bc?s=%5EDJI&t=2y
Wilshire 5000, 2 years:
http://finance.yahoo.com/q/bc?s=%5EDWC&t=2y
NASDAQ composite, 2 years:
http://finance.yahoo.com/q/bc?s=%5EIXIC&t=2y&l=on&z=m&q=l&c=
S&P 500, 2 years:
http://finance.yahoo.com/q/bc?s=%5EGSPC&t=2y
Fidelity Total Stock Market Index, 2 years:
http://finance.yahoo.com/q/bc?s=FSTMX&t=2y
Yes, I can see why your money isn’t “moving”.
My comment about Caughlin Ranch was probably too obscure to be understood by very many people; an explanation - people who live in CR seem to ‘believe’ that a HoA can just spend freely forever, that property values which are declining everywhere else are somehow protected in Caughlin Ranch, that annual dues increases will not ultimately affect their ability to sell their homes, and that you can spend 300,000 + a year watering huge green spaces that benefit about 10% of the homeowners who are actually close enough to enjoy them…It amazes me how people can be so delusional.
While there care many cons about a “major” housing adjustment or downturn. I think we all know many of them So im not going to list all of them.
Eventhough Real estate to an investor may seem to be a high risk/low reward “investment” The effect that this has had and is still having on homebuilders financials is painfully obvious.
Its quite simple really, take into consideration The homebuilders have A rediculous amount of inventory which needs to be moved sometimes even at a loss.
It is my belief that many of the existing home builders are making the bulk of their money IF ANY from the land they purchased more so than the house itself.
90% of a homebuilders assets are generally property, as property values head south so do the homebuilders standing inventory. not too mention many angry shareholders!! haha
In a sense What im trying to get at is. Just as it made sense to buy a home 10 years ago, It makes just as much sense to Short these stocks. That is about the easiest money you will ever make!
Cheers.
I was in Las Vegas last week, stayed at the JW Marriott in Summerlin, it’s a nice area of LV as far as I can tell. There are tons of new tract homes in Summerlin, all appear to be less than 3 or 4 years old. I didn’t know LV sand was so valuable, but most of the new homes appeared to be built on 4k sq ft lots, and signs indicated sales prices in the low to mid 300k. We drove through a couple of subdivisions and there were a ton of homes for sale, and huge builder inventories. It was just a casual observation, but from what I saw I would guess that LV is in worse shape than Reno is- anyone have any figures to support that or prove me wrong?
You can see from this link http://www.housingtracker.net/old_housingtracker/ That inventory in Vegas is through the roof compared to this time last year, while Reno is about the same as this time last year.
That’s insane…27k + homes on the market in LV? geez. Oh here’s another question for the experts. While sitting in the airport in LV I was listening to two guys talking about a house they were selling. I didn’t catch it all, but I guess they were selling new homes, the gist of the conversation was:
“what was asking?”
“405k”
“what’d she offer?”
“279K”
“tell her 315k and bump her 1/2 point”
My assumption was that they were going to raise her interest rate to make up some of the loss - how does that work? Do builders offer their own financing? or do they get kickbacks from banks if they offer financing for a higher rate than the buyer would ordinarily pay?
2sleepy,
Many of the national builders have their own mortgage company. While it is illegal to require a buyer to use any particular mortgage company to obtain his loan, the builders can put on a real song and dance routine. They tie the “incentives” to “if you use our lender, who, as it happens, is right here in the next office.” Since the profit ultimately ends up at the same bottom line, the builders can create the illusion/delusion in the mind of the buyer that he is getting a “great deal” on incentives while making up for it to some extent on the loan terms.
Don’t you find it interesting that the builder here was willing to knock $90K off the price. The builder gives a 23% haircut off the price without blinking. This is how the builders are going to decimate the resellers.
Lindie- it’s really sad. I just hope most of the folks who live in areas that are taking that kind of hit can bite the bullet and hang on to their house for oh, I dunno, maybe 10 or 15 years? Hopefully at that point they might break even….
BB: About the Mayberry Stables… the property also comes with a complete set of approved, engineered plans by noted Malibu Architect Ron Goldman to convert the barn into a contemporary, environmentally friendly residence. It’s an absolutely unique development opportunity, zoned residential. http://stables.dianecohn.com/