Builder deals are in full force, and the best opportunities will soon disappear as they sell through remaining inventory. Just this weekend JR Horton boasted sales of 270 homes in the last five weeks. They’ve been busy.
At some point on this blog I remember suggesting that perhaps builders should guarantee prices so that buyers wouldn’t be afraid to purchase. The idea was regarded by readers at the time as pretty much crazy, but lo-and-behold, this weekend Ryder announced its price guarantee at Talon Pointe. If the median price goes down through the end of 2007, they’ll refund you your prorated difference.
Timing the bottom is tricky. Are we there yet? read
Insider
We are no where near a bottom. When a major bubble collapses it is a long process before we hit bottom. Take a look at this link http://www.gold-eagle.com/editorials_01/seymour062001.html Simply replace stocks and stock market with Real Estate. We are currently at stage 15. Been hearing a lot of “the worst is behind” talk lately.
Lindie
“If the median price goes down through the end of 2007, they’ll refund you your prorated difference.”
Diane, could you please explain what this means. The median price of what? New houses? Resale houses? Houses in that development? The median as of when? The “prorated difference” between what and what?
I’m sorry, but this sounds like mumbo jumbo. Can you perhaps provide an example, using real numbers?
Thanks.
Gary
You say “I remember suggesting that perhaps builders should guarantee prices so that buyers wouldn’t be afraid to purchase”… Pacific West has done this at Caviata in Spanish Springs, now
drbrightside
Diane,
First of all, I very much appreciate your site, your insight, and your candor. Though you are in the business, you have a realistic outlook on the market. I track the Sacramento market closely as it was one of the first to lead this nation’s housing turn (along with San Diego) and I believe will lead it out. Prices/market peaked in August 2005. I would estimate the Reno market followed by six months, maybe a little longer (you could tell me)? And because of proximity and similar buyer profiles they should track pretty close but delayed. Inventory in the four county Sacramento MSA is down 20% since peaking this last August. And no it doesn’t matter if the reason is sales driven or a seller is pulling their listing, a prospective buyer just pays attention to how much they have to look at thus determining their sense of urgency. In any event, if you want to see the future of your market, wactch Sac, inventory has been dropping, and we’ll see how that trend holds up for the possible shaping of a spring “fling” in the market. Also if you pay attention to the number of new jobs to new housing permits both in Sacramento and Reno it is close to 2-1, which is a strong prognosticator for future housing needs.
Diane Cohn
Lindie, here’s what the ad from Ryder Homes said: “We’re so confident in the Northern Nevada economy, that we’ll guarantee the Reno area median new home price to the end of 2007. If it goes down, we’ll refund you the percentage change applied to your Talon Pointe base house purchase.”
So, here’s how I interpret that. If you buy a $500,000 base price before upgrades home at Talon Pointe, and say, for example, on 12/31/07, the median price of a new home in the Reno area has gone from $400,000 to $360,000 (hypothetical numbers only), that’s a 10% drop. As I understand the guarantee as printed, they’ll refund you your 10% equity loss, which would be $50,000 on your $500,000 Talon Pointe home.
Disclaimer: I am simply intrepreting an ad in last Saturday’s newspaper to the best of my ability, and really, if you want to understand the Ryder guarantee and all the restrictions that no doubt come with it, you need to speak with a Ryder representative. Also, I have no idea what the median new home price in Reno is as I don’t have access to those reports. They must look pretty good, however, for Ryder to offer such a strong guarantee.