Three new homes closed this month at $165 or below per square foot. The average price per square foot for new homes year to date has been $197 per foot, that has dropped since June 1, 2006 to $189 per foot and now we see these closing below $165 per square foot. These prices per square foot do not take into account other incentives being offered, which effectively lowers the price further. This builder is clearing out inventory by giving the buyers the incentive they are really looking for: A Better Price.
As an outside observation, it looks like they are getting prepared. These guys running this building company were all Boy Scouts I’ll bet. In Boy Scouts you learn many things including the Scout oath and the law, to be trustworthy, loyal, etc but the Scout Motto is “Be Prepared”. Funny that’s what they say about many things in life, to be prepared, for storms, earthquakes, attacks, budgets, what ever life throws at you, its always more comfortable if you are prepared for it. This builder has made some other changes as well; I noticed they closed an office. It looks like they are tightening their belt. They know how to play the game, they are the pros.
Apparently they are not comfortable gambling that the market will bring the prices they wanted, so they lowered the prices and Bingo the homes sold. It is almost like magic, a home sits and sits and sits on the market, with hardly a looker, drop the price and bang it’s gone!
The message is clear to all sellers out there today, the future market is a gamble. So how much do you want to risk, how far are you willing to push it? What is at stake, can you afford the loss if things don’t work out? For some the consequences will be severe and avoidable. Strange contradiction severe and avoidable.
I don’t worry too much about those who have their eyes open and are going forward; they apparently are willing to play the game. It is the folks who have been given bad advise or no advise that I feel bad about. They seem to be drifting blindly ahead, holding tightly to the idea that they can’t lose money in real estate. Comforted by the higher asking price.
So some will gamble, some will get prepared, and some don’t have a clue.