Slumping Jersey builder slashes home prices, up to 6 figure discounts this weekend

MJMANDALAY

Registered User
Jan 26, 2005
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Just a few years ago, Hovnanian Enterprises held lotteries to sell new homes because demand for housing was white-picket-fence hot.

Now, with the residential real estate slump deepening by the month, the largest New Jersey-based homebuilder is holding a fire sale at developments across the country. Prices this weekend will be slashed by up to six figures -- $100,000, $149,000, in some cases $240,000.

It's a sign of just how far the housing market has fallen from the boom years -- and just how desperate homebuilders such as Hovnanian are to move inventory.

"Crazy Eddie is back in the real estate business," said Keith Gumbinger, vice president of HSH Associates, a consumer research firm in Pompton Plains. "Folks who are sitting on the fence right now are waiting for a reason to buy."

Other developers have offered rich incentives, from cars to vacations, to entice buyers during the market's downturn. But housing industry experts say the discounts being offered by Hovnanian are unprecedented.

One homebuilder, Lennar, slapped huge discounts on some of its homes late last year, according to Jeffrey Otteau, president of the Otteau Valuation Group, an East Brunswick real-estate consulting firm. "Other than that, I don't remember anything on this scale," he said.

Hovnanian, based in Red Bank, says it expects hundreds of home buyers to crowd its developments this weekend throughout New Jersey. The so-called "Deal of the Century" sale, which covers 19 states, begins at 9 a.m. Friday and ends Sunday at 9 p.m.

"Our competitors have done this only with some degree of consistency," said Michael Skea, vice president of marketing and sales for K. Hovnanian Homes-Northeast in Edison. "The long and short of it is that folks are looking for homes that are right-priced. Some people will perceive this as a fire sale, but we do not."


RED TAG SALE

Hovnanian is holding what amounts to a weekend red tag sale because the real estate market continues to slump in New Jersey and around the nation. New home sales in the Northeast plunged 24 percent in July, according to the Commerce Department. In New Jersey, the inventory of unsold homes in June soared to a record 72,000, compared with just 39,000 during the same period two years ago.

"The outlook for housing remains poor, with ongoing adverse implications for the rest of the economy," said Charles Lieberman, chief investment officer of Advisors Capital Management, a Paramus money manager.

Hovnanian's fortunes reflect that downturn. The company lost more than $80 million in the quarter ending in July, compared with turning a profit a year earlier, and sales tanked by 27 percent. The company's stock has plunged to about $10 a share, down from $60 early last year.

As an example of how tough the market is, Hovnanian is lopping 25 percent off the price of a Hazeltine model at its Four Seasons at South Knolls development in Jackson Township. The single-family home with 1,788 square feet of space, two bedrooms and two baths will be offered this weekend for $300,501, the company said. The original asking price was slightly more than $400,000.

Not every discount will be so generous. "Incentives at each community will vary, and the incentives on certain model types within the same community may also vary depending upon their stage of construction as well as their location within the community," Skea said.


DEPRESSING AN ENTIRE MARKET

The problem with such massive sales promotions is they could depress the value of other homes sold in recent months.

"It certainly doesn't help home values because it drags down comparable sale prices," said Greg McBride, senior financial analyst for Bankrate.com, which tracks the real estate loan market.

Skea, the Hovnanian vice president, said the company recognizes some recent homebuyers might feel uneasy about the sale. However, most of those buyers probably received some type of incentive as well, he said.

"Those who purchased previously already chose the home and location they wanted," he said. "Those may not have been the same if they'd gotten a 'Deal of the Century' home."

The price cuts will be offered at 17 Hovnanian developments in New Jersey. Details are available at the developer's Web site (www.khov.com).

Home prices are expected to rise an average of 0.5 percent this fall and then retreat by that much during the winter before dropping between 2.5 percent and 4.5 percent next year, according to Barclays Capital Research. The declines will be "driven mainly by an excess supply of homes on the market, a reduction in the availability of mortgage credit" and a fall off in home buying by real estate speculators, the research firm said.

Home prices have declined because inventories of existing homes are at their highest levels since 1991, according to Steven Wood, chief economist for Insight Economics. Sales peaked in the summer of 2005.

July was the 12th consecutive month "that median prices have declined on a year-on-year basis, the longest period since data collection began in 1968," Wood said.





Now your house just went into the shitter with the rest of the state
 

THE FEZ MAN

as a matter of fact i dont have 5$
Aug 23, 2002
42,613
9,648
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#2
fuck them and there mc mantions. i hope they all burn in hell surrounded buy there junk mortgages and cheep fake hard wood floors..... fuckers deserve to starve
 

Nortonsmeatytit

"That ball is outta here"
Sep 11, 2005
1,023
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Philly
#6
I just saw a piece on the NBC national news tonight about this and they briefly interviewed this Asian husband & wife who eagerly signed a deal on a new Hovnaian house that just dropped $100,000. They then interview this guy in the same housing development who stated "I feel kinda foolish cause I paid $200,000 more than what they are offering these homes for now about two years ago"

People are such fucking idiots in this country, there is a time to buy and a time to sell, so many total fucking maroooons bought at the height of the hyped market. Tools all of them.
 
Feb 3, 2006
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Pennsylvania
#7
:icon_razz
I just saw a piece on the NBC national news tonight about this and they briefly interviewed this Asian husband & wife who eagerly signed a deal on a new Hovnaian house that just dropped $100,000. They then interview this guy in the same housing development who stated "I feel kinda foolish cause I paid $200,000 more than what they are offering these homes for now about two years ago"

People are such fucking idiots in this country, there is a time to buy and a time to sell, so many total fucking maroooons bought at the height of the hyped market. Tools all of them.

You feel foolish if you paid a few hundred dollars more for something than someone else. You feel like putting a gun to your head when your house is worth $200,000.00 less than you paid for it two years ago.
 

HummerTuesdays

Another girrrrl!!!
Apr 24, 2005
7,347
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#8
The bigger issue is that god forbid something happen to that guy that bought 2 years ago. He is no longer eligible for a home equity loan because odds are he owes more on the house than it is now worth.

On the plus side hopefully we'll see a nice pause in urban sprawl.
 

BCH

Doesn't need your acknowledgement on Twitter
Wackbag Staff
Jun 9, 2005
9,519
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New York
#9
I'm glad I owe a third of it's value on a fixed mortgage less than 6%
 

moegolden

Perv-switch toggler
Oct 3, 2004
7,293
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#10
and yet NYC (Manhattan and the nicest parts of Brooklyn) is still insulated from all of this. That's the beauty of the manhattan market - an island is always an island. there's only one fifth ave.

I guess you could throw Hoboken and the harbor at Jersey City in there too.
 
Aug 5, 2004
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#11
The market is soooo ripe for the picking now.. I just made an offer on a foreclosed property that is about $100K less than its potential value.. The bank has had it on the market for a while so i watched the price drop and drop..

cant wait to get my hands on it and put some sweat equity in.. and it has a rental apt downstairs.. that should pay for 1/2 the mortgage
 

THE FEZ MAN

as a matter of fact i dont have 5$
Aug 23, 2002
42,613
9,648
848
#12
i got this shit box so cheep that even now in this crappy market i could sell it and make 100k, the bitch is i cant up grade in this neighbor hood for less than 500k, the mc mansions ruined the large property's, and i REFUSE to be able to hear my neighbors talking. i must have at least 2 acers to up grade
 

Sinn Fein

Infidel and White Interloper
Wackbag Staff
Aug 29, 2002
31,547
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Florida's Nature Coast
#13
My wife and I have been in this house since May '05. There are STILL houses on the market here that were for sale during our search that ended here.

There's a house up the road from us that has come down like $125K in price. This kinda sucks, because it'll lower the value of ours. But, on the other hand our neighbors are trying to sell their house and it's significantly smaller than ours, less options, etc. They are trying to get like $60K more than ours was appraised for a year ago.
 

Schmed

I'm a corpse without a soul...
Nov 4, 2002
2,356
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Shitsville, NY
#14
The bigger question is what is this going to do for real estate taxes ? I don't seem them going down, no way in hell.

My taxes were $7100 in '03 and now are close to 10K, if they dare increase my taxes this year and the assessment of my home, I'll have a problem.

What I paid for my home 4 years ago does not seem so cheap anymore.
 

Jolie

Filthy Liberal
Aug 25, 2002
2,940
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Virginia
#15
The bigger question is what is this going to do for real estate taxes ? I don't seem them going down, no way in hell.

My taxes were $7100 in '03 and now are close to 10K, if they dare increase my taxes this year and the assessment of my home, I'll have a problem.

What I paid for my home 4 years ago does not seem so cheap anymore.
It wont lower taxes at all. They will adjust the tax rate so you are paying more. Just because real estate is dropping doesn't mean that your city / county will stop needing property tax funds to run - and their budgets are going up every year, so expect your tax rate should as well.
 

abudabit

New Wackbag
Oct 10, 2004
14,802
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#16
[sarcasm]I think the best thing to do for an ailing industry is to increase the taxes put on it.[/sarcasm]