Discount houses on sale everywhere
Click below for interesting story about builder D.R. Horton's mammoth housing blowout at 12 Inland Empire locations ...
For more information about this weekend's discount housing sales in Adelanto, Victorville, and 10 other area locations, call (760)246-1798 visit www.DRHortonUnAuction.com
By Robert Rogers
Staff Writer
The buyers were out. Some were families looking to finally dive in. Some camped out days in advance to get first crack at the price.
With sluggish sales and a glut of inventory, builders and banks have employed a number of strategies to unload properties to a spooked market this year.
Auctions have been a hit, with white-knuckled buyers driving up prices in searches of bargains.
But in Adelanto last weekend, developer D.R. Horton went for a different tactic, the "un-auction" to draw buyers out.
"It's auction prices without the auction hassle," said Cherlyn Brown, a company spokeswoman.
More specifically, the "unauction" D.R. Horton uses to unload backed-up inventory advertises a price "40 percent below market value." Interested buyers pre-qualify for loans by phone and show up at the "unauction" with $2,500 cashier's check in hand.
First in line gets first crack at the house.
The bonanza isn't over. On June 28-29, D.R. Horton will look to sell never-before-lived in homes in Adelanto, Victorville and 10 other Inland Empire locations.
Prices in Adelanto are as low as $218,000 for a 2,649 square-foot four-bedroom home, said Asha Ramirez, a sales representative.
Tim Adams, a San Bernardino realtor, said the rumblings in the industry are that buyers are growing more aggressive as prices continue to sag.
"Before, it was totally dead," Adams said. "But now, people are getting pent up and anxious. The phones are ringing again."
On the surface it would appear the buyer is getting a great deal from D.R. Horton but I’m afraid the buyers who are out there aggressively pursuing these discounted properties are buying prematurely. In so doing they may be painting themselves into a corner while bailing out both the developer and home builder. Sure a 40% discount is enticing but some banking analysts are predicting home values will continue to fall for another 18 months which is in agreement with Abidi and Husing. So if values continue to fall at the predicted rates then we can expect a property purchased today at $258,000 to loose another $70,000 in value, how appealing is that 40% discount now?
This market is not conducive to the first time buyer nor is it a market for people with limited financial flexibility. They should wait and see how long the economic down turn is going to last and what measures the municipalities institute to stimulate economic growth, combat blight and improve community desirability. None of us like to think in these terms but what happens if the job market continues to dry up in this area, how will these buyers compensate for the increased cost of commuting if they are fortunate enough to find work outside the area?
The estimates say things are going to continue in a downward slope for another 18 months but that doesn’t mean things are going to immediately begin to turn around. What happens if and when the 18 month period elapses and nothing has changed in terms of the global and domestic economies? Now that buyer is stuck with a property with no equity. Multiply these factors over the expanse of an entire subdivision and you have the makings of a massive problem. That’s the perfect setup for more urban decay and blight issues.
How many of these buyers are willing “or can afford,” to stick it out in hopes that they can recover at least a portion of the lost value? How many will have the resources to adequately maintain their properties without the benefit of home improvement loans? Suppose the Celeste Cantu’s succeed in deregulating the water market and energy costs continue unchecked? How will those neighborhoods fair then?
This type of thinking doesn’t benefit the builders or the developers and it definitely flies in the face of what Husing and Abidi are saying but they aren’t looking at the long term effects of impulse or media influenced purchasing on the community.
Even if the buyer is lucky enough to have neighbors who can afford to keep their properties up over the next 18 months, there are still no guarantees the housing market will regain the values we’ve seen over the past 6 years. I for one don’t believe it will. I am of the opinion that the market is correcting itself back to the real value of these properties. The speculators have moved on to the energy sector and without their manipulation, things will simply settle out.
Even so, the buyer should still consider the health of their city government. San Bernardino is facing a budget crisis which is only going to get worse as the state slices fat off its budget. So that probably means a reduction in school funding, public health projects, infrastructure etc. all areas which effect the desirability of an area. Like it or not, at some point we are going to have to accept the fact that taxes are going to have to be raised. That is if we are going to head off the devastation which is sure to follow those budget cuts. The anti-taxers and free market promoters will never admit that the market is incapable and unwilling to offset the issues which are caused when tax revenues are removed from the public coffers.