Now home builders are doing something new to attract reluctant buyers: drastically cutting prices.
The Groves at Falling Leaf in Modesto's Village I community, for instance, has slashed prices up to $60,000 and are giving $20,000 in incentives.
That makes the starting price for its 1,620-square-foothome $269,900, minus $20,000 that can be used to further lower the price, pay for upgrades or cover closing costs.
Not long ago, the same house was priced at about $330,000.
"You've got price points now that are down to 2004 or early 2005 levels," said Steve Smiley, asenior manager for Hanley Wood Market Intelligence, which tracks the Northern San Joaquin Valley's new home market.
"Some builders are being very aggressive about (reducing) prices and giving incentives," Smiley said. "They're going to sell their houses for what they can get, regardless of what they paid for the land."
Examples:
Meritage Homes this weekend is offering $100,000 "to spend any way you want" including reducing the purchase price at its subdivisions in Ceres, Lathrop, Modesto, Oakdale and Ripon.
D.R. Horton is promoting "rock bottom pricing" at its Diablo Grande homes, with reductions and incentives worth up to $80,000. One of its 2,171-square-foot homes that had been priced at $443,695 was being offered for $383,695, minus $20,000 for closing costs.
Lakemont Homes' Moraga project in Merced has cut prices $30,000 to $60,000 per home. Its advertisements claim prices for some of its houses are "below builder cost."
New America Homes' Mansionettes in Livingston is offering "a $75,000 price reduction on select models" for those who bring in its Modesto Bee ad.
The bargains are best on unsold homes that are finished or nearly finished.
"It's very expensive to hold standing inventory," explained Shane Hart, senior vice president for The Grupe Co., which is building River Pointe in Waterford.
One of the unsold River Pointe houses recently had its price sliced nearly $55,000, down to $295,000. Hart said the price cut worked; the 1,614-square-foot house sold.
"Modesto is one of the most challenging markets in the state right now. Builders are selling less than two homes a month, which is not good," Hart said. Grupe has been offering incentives and lowering prices as much as $55,000 to keep its sales going. "The last three months, we've averaged about one sale per week. We're really happy with that."
Hart doesn't expect a quick recover for Stanislaus County's new home market, primary because of tightening requirement for subprime loans.
"In the Modesto area, about 40 percent of those who were buying new homes were getting subprime loans," Hart said. He estimated that about half of those subprime borrowers would no longer qualify for mortgages.
That would mean there are about 20 percent fewer potential new home buyers in the region compared to a few years ago.
Smiley agreed with that estimate. He said the sales market could get worse as previous subprime borrowers fall behind on their payments.
"There's going to be a lot of foreclosed houses around," said Smiley, noting that builders and used home sellers compete for buyers. "That's why incentives will not go away soon."
'Bouncing on the bottom'
Some builders, however, don't expect prices to fall much further.
"Price-wise, we're pretty much bouncing on the bottom," said Robert Martelli, co-owner of JKB Homes, which is building in Oakdale, Turlock, Riverbank, Hughson and Denair. "We haven't lowered prices in months, and I'm not going to."
Sunset Meadows in Oakdale also is expecting to hold firm on its prices. The units it is building are priced about the same as they were a year ago, but they include more upgrades â such as granite counters â than before.
"We try to stay $70,000 to $80,000 below the price of equivalent single-family homes," said Jim Lawrence, Sunset Meadow's salesman. It has several finished homes available, including one that's 1,948 square feet priced at $307,500 â after incentives.
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