Posted on 09/14/2007 8:42:42 AM PDT by 2ndDivisionVet
NEWARK, N.J. - Hovnanian Enterprises Inc., struggling like other home builders, is offering six-figure discounts on some of its properties this weekend as it attempts to draw interest in a slumping market.
The sales blitz involves dropping prices by more 20 percent on some of its prime real estate.
The largest discounts are on the most expensive homes, including a 3-bedroom condominium by the Hudson River in West New York, which has been reduced $240,000, or 22 percent, to $862,000 this weekend. A 25-percent discount is being offered on a 2-bedroom home in Jackson Township, N.J., which lowers its price tag to $300,501.
Hovnanian's discounts come during the worst housing downturn in 16 years, which has slashed earnings for the Red Bank, N.J.-based company and other national home builders. Tight credit, fueled by a meltdown in the subprime mortgage industry this year, has sidelined potential buyers who were already wary following years of escalating home prices.
No other major builder is having a sale of such magnitude, but swollen inventories are likely to lead to more discounting, said Sam Chandan, chief economist at Reis Inc., a real estate research firm.
"We've certainly seen conditions in the housing market continue to deteriorate in the last several months," Chandan said. "The downward adjustment in prices, whether for new homes or existing homes, is going to be far more severe than what many people thought earlier this year."
Although forecasts predict continued declines in the number of homes whose construction is under way, the climate is seen as an opportunity by Hovnanian, which last week reported its fourth consecutive quarterly loss.
"Folks are ready to buy, they are just waiting to confirm that there is value out there," said Michael Skea, vice president of marketing and sales for the company's northeast sector.
This weekend's sales, announced on Sept. 5, involves thousands of homes in 19 states and starts at 9 a.m. Friday and ends at 9 p.m. Sunday, said Skea, adding that the company has never had such a sale in its half-century of homebuilding.
The company promoted its "Deal of the Century" with radio and print ads, and Skea said "hundreds" of people have made appointments to visit homes this weekend.
"We think it will effectively overcome the malaise that people have been carrying around since the subprime debacle occurred in late February," he said. "It's just a matter of getting the buying public to realize this is a great time to buy."
Indeed, mortgage rates remain at historic lows.
Skea said the sale would not be repeated, but an industry observer was not so certain.
"Depending on how successful it is, it might not be a one-time event," said Keith Gumbinger, vice president of HSH Associates, a consumer loan research firm in Pompton Plains, N.J., suggesting that buyers might wait if they thought a better discount was imminent.
Gumbinger found the sale remarkable, given low mortgage rates.
"You wouldn't think there is a need to go to the marketplace with such discounts," he said. "This is a pretty good indication from a prominent homebuilder that the market is troubled."
Recently, other builders have offered savings as price cuts and free appliance upgrades, he said, although they have avoided such big discounts so far.
Hovnanian's Skea said the prices offered this weekend will involve "no further negotiating" and contracts must be signed by 9 p.m. Sunday.
Last week, Hovnanian reported that after paying preferred stock dividends, it lost $80.5 million, or $1.27 per share, in the quarter that ended July 31. That compared with a profit of $74.4 million, or $1.15 per share, in the same period a year ago.
___
On the Net:
Hovnanian: http://www.khov.com/
Beazer: http://www.beazer.com/
“Folks are ready to buy, they are just waiting to confirm that there is value out there,”
Definately, there many, many, out there ready to go. When they think they see a bottom they will be jumping in
And that is for a two bedroom. Somebody is sick! And they would be mentally sick to pay that kind of price!
Welcome to New Jersey!
With that much value disappearing, the market finally seems to be correcting itself, if they can take 240,000 off of the top of the price of a condo, there is more room for price reductions.
My cousin just sold her two bedroom condo in Tarrytown NY for 440,000.
That price would buy a McMansion in Dallas/Ft. Worth and a lot of other places...
Now I'm as big a fan of capitalism as anyone, but some of these bloated home prices tick me off sometimes. There's profit, and then there's obscene gluttonous greed. Why am I rooting for some of these speculators to get their behinds handed to them???? Too many episodes of Flip This House/Rip Off the Unsuspecting Buyer????
Well your cousin seems to be the smart one, If she has a nice red pickup and a boat I might give her a call. LOL :)
Shoot! At those 'bargain-basement' prices, I think I'll go out and pick up a dozen of 'em!
Not to mention the property taxes...
Ansd what if you were the poor slob who bought one in the smae subdivision and same model in the past few months? You are so shatfed.
This thread really belongs on the FR Friday Silliness Thread: http://www.freerepublic.com/focus/f-chat/1896434/posts
Oh, well.
Homebuilders and homeowners who want to sell must finally face the fact that they need to lower their prices. Many people aren’t just waiting for the bottom, they just can’t afford these inflated prices.
This is the second phase of the housing correction. Home prices will now start coming down.
Your anger is a bit misplaced. Oftentimes it is the price of land that drives the price as much as the luxury (or not) of the home.
In my local market, even today, a one acre unimproved lot goes for $200K.
This reminds me of the jewelers who cut their prices by 20%. Even with the cut, they are still vastly overpriced!
Live by the ugly suburban tract house, die by the ugly suburban tract house.
(Inner-city homeowner and loving it)
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.