Buyers Get the Edge

published 30 April 2006

Homebuilders hate to cut prices for fear of torching everyone's property values and setting off stories about weakness in housing. But they know real estate is cooling, so they are advertising goodies galore. And now there are signs that the taboo against price-cutting is lifting.

For the most part, builders limit inducements to paying closing costs or buying down the interest rate or paying points. Or they toss in upgrades or extra space at no cost. The box on the right shows some come-ons in builders' ads in Sacramento, Chicago and New Jersey.

But at the luxury end of the new-home market, you may actually see some movement on price. In New Jersey, Kara Homes has advertised discounts from $20,000 to $246,000 on already-built homes priced from $300,000 to $1.5 million. Centex Homes held 12-hour "marathon" sales, where it discounted homes by as much as $150,000. In Sacramento, local builders say that at least one of the big national outfits is done playing "the incentive game" and will shortly cut prices.