"Everything must go! All our 1999 inventory must be cleared before the 2000
model year begins!! So come in now to get your best deals on a . . . . new home?"
Yes, you heard it. Production homebuilders across the country traditionally
use the end of the year for price reductions and buyer incentives where there
were none, to homebuyers who can close escrow before the clock strikes 12 on
December 31st. Why? For the same reason other businesses seize the
opportunity - for tax savings and the ability to avoid carrying inventory
into the next calendar year.
The last quarter of the year is customarily when the home building business
slows. Buyers who wanted to get settled into new homes have usually done so
by August or September. Kids are back in school, activity for the holidays
takes precedence over home buying, and the weather turns unpredictable and
slows the building process in general (concrete slabs are usually not poured
in the rain).
Where homebuilders accomplished their big "push", opening new phases of
construction in previous months, the October through December cycle weighed
heavily on their minds, as it does every year. Whenever they could, many
builders "spec" built homes without the benefit of interested buyers in place
to take over the monthly payments, because their knew the coming months would
slow their production pace. Some builders may also face some cash flow
anomalies without a few "quick sales" up their sleeves possible by year-end.
What does this translate to for new homebuyers? In a word - deals. Many a
home builder would "stand on their head and eat a bug" to hear the words,
"and the buyer is willing to close by the end of the year", from their sales
agents, so now is your time to bargain, or try to bargain, no matter what the
builder tells you is possible. Despite a strong building economy for 1999,
there will almost always be a few "straggler" homes in a given subdivision.
Perhaps someone "fell out of escrow" and didn't get to relocate, as planned,
but the house they ordered is half built. Or perhaps, as I said, the builder
spec-built one or several homes to hedge against year-end cash flow dips. It
could also be that the builder just wants to post as many sales and closings
on his calendar and corporate year-end books to delight shareholders or for
corporate weenies to puff their chests out over. Whatever the motivation,
they realize November and December are not when most folk like to move, so,
voila - the year-end inventory reduction sale.
Sometimes the reduction is not much; a lowered or eliminated lot premium,
upgrades already ordered or installed may be "given" away, or the builder may
offer a special financing incentive to buyers willing to celebrate the
holidays with moving boxes as a decorating scheme. Whatever it is, there is
no reason not to ask the builder right away what deals exist for the
privilege of taking one of their new homes off their hands by the year 2000.
So, go for the gusto, put your "wheel and deal" hats on and get out there,
'cause there's never been a better time to buy! (Prices do not include tax,
license and dealer prep)
For more New Home News, Click Here
Published: October 13, 1999
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