Home Builders Signal Slowdowns
In another sign that the real estate market is cooling, new home builders are starting to signal that prices are not going to continue to soar. Many are starting to offer bigger incentives to buyers. This is true even in states that have been very hot recently, like California and Florida. These incentives range greatly from builder to builder, and many of them, such as free golf-club memberships, won’t be of particular interest to investors. But other offers include discounts or closing cost reductions. If you are buying a new home, make sure to ask for an incentive, they are not always advertised.
Toll Brothers, a large builder also is predicting that they will sell fewer homes over the next 12 months than it previously predicted.
“The price increases pre-Katrina were at warp speed, and since Katrina, instead of going up $5,000 or $10,000 every week or two, we have been limited to no price increases or very limited price increases,” Robert I. Toll, the company’s chief executive, said in a conference call yesterday. The number of investors buying condominiums and houses in the hope of turning a quick profit also seems to have plunged, he said in an interview last week. “The true speculator is gone from the market,” Mr. Toll said.
People have been expecting this slowdown for a while now, especially since the mortgage rates have been climbing. The question now is, are pricing going to actually drop in some markets or just remain level for a while?