Builders in a Bind Over Deep Discounting
When freebies failed to attract new buyers, builders increasing saw their bottom line eroded by excess inventory and rising carry charges. In all, the tactic appeared to be backfiring. Potential home buyers are proving unwilling to purchase homes until prices stabilize, fearing further price depreciation, so builders have not gotten the sales volume needed to compensate for their reduced margins. The market is not expected to improve soon and builders desperate for cash and saddled with inventory, many have been unwilling to resist price-cutting. If they didn’t cut their prices, they reason, buyers would either turn to competitors who offer better deals or buy used or foreclosed homes. Potential buyers are coming in “nine or 10″ times. If they hear the deal today is better than the deal was two weeks ago or a month ago, they’re not going to buy.
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