A lesson of sorts on moving homes in a tough market
Home builders aren’t the best loved guys on the block in many parts of the country.
The Boston area, for the most part, dodged the overbuilding bullet. Not so, of course, for once hot markets in Florida, California, Nevada, which are now struggling to dig out after being buried in an avalanche of empty new homes after a frenzy of overbuilding by the big, publicly traded home builders.
But you have got to hand it to these guys, some of the same builders who created the mess are coming up with some creative ways of cleaning it up.
Realtors take note here.
Lennar Corp’s stock soared Thursday after the big national home builder reported that it had managed more than cut in half the number of completed, but unsold homes on its books.
Back at the end of February Lennar was sitting on more than 1,300 unsold homes. Three months later, the home builder has whittled this number down to 626.
No cake walk, the sales have come amid fierce and low cost competition from the flood of foreclosed homes that have innuadated the market.
Creative marketing appears to have made a difference. Lennar has managed to attract buyers with a 3.6 percent mortgage, no money down deals, and a “sealed bid’’ auction process pitched as giving buyers a hand in setting the price.
Still, the incentives are costly, adding up to more than $52,000 per home sold, or 21 percent of the sale price.
And despite the reduction in inventory, Lennar is still losing money - $125 million in the second quarter.
Of course, there are some obvious concerns here too. In their hurry to get these lemons off their books, are some of these builders laying the groundwork for another wave of foreclosures?
Low rates are one thing, but no money down deals sound worrisome.
Definitely not perfect, but it’s a start.
