With economic uncertain and past week Fed shutdown due to the Congress debacle on debit ceiling debate, Real Estate Market has faced little bit of headwind slowing down the progress as per many analyst. But we are still making good progress compared to previous years. Interest rate uncertainity also dragging the sales down. With all this pressure from upwards and high home price increase from previous months, winter approaching, consumers have slow down on their purchase momemtum and builders are noticing the slow down. Here is a snapshot of the report about “Home Builders Boost Incentives, Upgrades as Sales Sag release by Wall street journal few weeks ago,

With home sales starting to slow, builders are giving buyers more incentives to purchase. Some are going so far as to offer tens of thousands of dollars in cash incentives as well as free home upgrades.

The rising cost of new homes — some markets have seen prices soar by double-digit percentages in recent months — and hikes in mortgage rates have deterred many buyers. Builders are trying to lure them back by agreeing to pay closing costs, part of the down payment, or offer a discount on a buyer’s mortgage rate for a year or two. Some builders are also tossing in some free upgrades, such as appliances, blinds, premium flooring, or garage door openers, The Wall Street Journal reports.

Nearly 30 percent of sales managers at 150 home builders nationwide say they increased their use of incentives in September, up from 14 percent who said the same a year ago, according to a monthly survey by Wells Fargo Securities.

“Everybody’s giving more incentives today than they were in the summer,” says Mark Ward, managing partner of ForeverHome LLC, a home builder in Raleigh, N.C. The builder, for example, agreed recently to cover $4,000 in closing costs and swap out carpeting with ceramic tile and hardwood flooring at no additional cost for a buyer of one of its $295,000 homes.

Another builder, Houston-based David Weekley Homes, is offering up to $20,000 in incentives to buyers who purchase a home in the Tampa, Fla., area by the end of the year.

Some builders aren’t even waiting for customers to ask for incentives and are advertising giveaways upfront, says Kendra Cooke, a real estate professional with Bob Parks Realty LLC in Brentwood, Tenn.

While incentives can generate sales, builders also must be cautious about how many freebies they throw in, since it lessens their profit margins.

“As the market goes through minor gyrations and corrections on a road to a broader recovery, we think that we will have to use incentives on a select basis,” says Stuart Miller, CEO of Lennar.

That’s the overall trend right now around nation but in Houston it’s not always the case. Builders are giving incentives as they are used to forever but didn’t see much of increase because they don’t foresee in any slowdown and they already sold more than expected in the summer and trying to catch to their delivery and will throw in some if needed but not seeing a lot of showdown. So buyers you have bit of leg room to ask for more since the market has slow down and Builder really want to sell it to you depending on the area. Good luck!!

About Vijaianand Thirnageswaram

I am a Proud Realtor of Texas, trying to guide and help clients to find their dream home and educate them to buy them for right price. I am also a Candidate for CFP who has more financial knowledge which allows me share and educate clients in any financial decision making process.

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