Triangle Report - Raleigh Real Estate News

For anyone that has purchased a new home in an area where price appreciation has not been that kind, I would like to explore some real estate truths:

• Home builders are corporations - While it is in their interest to sale homes that appreciate and create value for their homeowners, their sole allegiance remains to that of the corporation and its shareholders. Hear me very clearly, home builders want to create win-win situations, but at the end of the day their financial decisions are motivated by its desire to generate returns for their shareholders. See the liberal documentary, The Corporation featuring Noam Chomsky.

• Home builders reserve the right to change their mind, just like you - When a real estate market is hot all home builders capitalize on basic economic principles of supply and demand. If you can sell a home for an extra $20k due to multiple offers, wouldn’t you? Likewise, if you had to sell your home in an emergency situation wouldn’t you take less? Home builders are no different, and if a market turns they will often do what they have to financially survive, even slash the price of the home your paid $15,000 more for last year.

• Home builders quote historical numbers, not guarantees to sell homes - When the new home salesperson tells you that homes in the area are appreciating very well, they are usually referring to historical data. If you are a speculator or investor it is up to you to understand the details and risks of your investment. In real estate, homes historically will appreciate over time, but no one can predict that time frame, or should I say those that can usually eat at restaurants that serve $24 bottled water.

From Businessweek Online:

Homeowners are getting slammed as builders slash prices. The big question: Will this shock treatment help hasten the end of the painful downturn?

Las Vegas was once the hottest of the red-hot real estate markets. But when sales really started choking up last year, developer KB Home (KBH) did something drastic. Determined not to be caught with a big backlog of unsold homes through one of the industry’s notorious down cycles, the builder started slashing prices. A lot. In the 1,400-home Huntington community, a subdivision of two-story stucco houses west of the famed Strip, homes that started at $320,000 a year ago are now listed for $270,000–just a starting point for potential deals. Rest

This entry was posted on Wednesday, October 29th, 2008 at 3:42 pm and is filed under Featured, Investor's Corner, Triangle News, Web RoundUp. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.