Friday, Aug 25, 2006

Rebates disguise falling US home prices

New York Times: Home for Sale, by Anxious Owner

Deal sweeteners are playing an increasingly important role in supporting home prices. From large national home builders to individual homeowners, many sellers are offering thousands of dollars in perks, including straight cash, so they do not have to slice deeply into asking prices. But these discounts are almost entirely missing from the statistics on new-home prices reported by the government and on existing-home prices reported by the National Association of Realtors. As a result, home prices may now be falling, despite what the official numbers show, many economists say.

Posted by james @ 02:00 PM (513 views)
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2 Comments

1. indiablue19 said...

This is a scarey thing to read about. We went through just this sort of enticement to buy a new home immediately ahead of the crash of Savings & Loan institutions in the States circa 1989. We were promised free landscaping, garden wall and swimming pool, and upgrades to house fixtures. The crash happened so fast, it was like an earthquake. My parents, a bit more experienced in economics than we were, felt things tremble, moved their life savings from the S&L to a Federal Bank and, no exaggeration, the next day their old S&L closed. They would have had thirty cents on the dollar if they hadn't jumped so fast. We weren't as lucky. The builder we were working with closed their doors and disappeared overnight as soon as the crash happened. Their bankers were an S&L, who support a lot of the US housing industry. Our house was substantially built, but no landscaping, wall, pool. Our own mortgage bankers had signed off on the house being complete -- under pressure from the builder who was going bankrupt -- and paid out our money! So I took a television camera crew to our bank president's office and made him promise me on live camera to finish the job at their expense. It got done. I don't think anybody who reacted a week later was so lucky. By then, all doors were closed and no chance to find a single soul who cared.

Saturday, August 26, 2006 12:43AM Report Comment
 

2. Retiredbanker said...

indiablue19

Well done by both your parents and yourself.

It gives me a warm glow inside when people are astute enough to safeguard their interests against
pernicious circumstances.

Saturday, August 26, 2006 10:41AM Report Comment
 

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