Developer offers two-for-one house deal
Promotion extended through end of June
By Inman News, Tuesday, June 3, 2008.Bookmarking Sites
A Southern California developer is using a popular retail sales tactic in an effort to unload new-home inventory in a struggling market: Two houses for the price of one.
Escondido, Calif.-based Michael Crews Development has extended the promotion -- originally set to end on May 31 -- through the end of June.
The company is offering the promotion to buyers of high-end homes -- with an advertised price of about $1.6 -- in the San Pasqual Valley, about 30 miles north of San Diego. Three homes at the Royal View Estate development are eligible for the two-for-one offer, in which the developer will toss in a home with a $400,000 price tag at its Cityscape neighborhood in downtown Escondido.
The homes in the Royal View development are single-level estate homes on lots that are two acres or larger, and the square footage of the homes ranges from about 3,500 to 4,200 square feet, with four bedrooms, four bathrooms and garages with up to a six-car capacity. The Cityscape development features 2,000-square-foot two-story row homes with four bedrooms, 2.5 bathrooms and two-car garages.
The San Diego-area housing market has been hard hit by a downturn after home prices soared to unprecedented levels during the first-half of the decade.
The median price of single-family detached resale homes in the San Diego region dropped about 27.4 percent year-over-year in April, to $443,520, the California Association of Realtors reported this month, with sales up about 1.2 percent.
And according to real estate data company DataQuick Information Systems, the median price of all new and resale single-family homes and condos in San Diego County dropped 19.2 percent year-over-year in April, to $400,000. Escondido's median price dropped 20.4 percent, to $350,227.
Dawn Berry, marketing director for the development company, said the company is targeting investment buyers for the two-for-one deal.
And while none of the three homes have sold in the nearly three weeks since the promotion was launched, Berry said the offer has created "a little buzz. Our phones are (ringing) off the hook," she said.
The Cityscape development was built about 15 months ago, with about six homes remaining for sale. The Royal View homes are move-in ready, she said, and the company is working on some of the finishing touches at that development.
“This is a great investment opportunity for buyers who might like a second home for their children, parents, grandparents and guests,” said Adam Rossman, broker associate for Michael Crews Development, in a statement. “It also makes the perfect rental property.”
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Submitted by Wenceslao Fernandez Jr on June 4, 2008 - 2:30pm.
This idea seems to be taking over America like wild-fire. Just yesterday I heard of a similar sale taking place in New York.
If this trend continues, builders may be digging their own grave. Selling at 50% off or 2-4-1 may seem like the way to go today. Hopefully however, they're trying everything else as well, including lease-option, bulk sales, auctioning, and renting.
This approch may backfire if buyers continue to sit on the sideline waiting for desperation to set it (as if these offers don't already indicate such attitude).
I'm certainly happy I'm not a builder sitting on unsold inventory while having to keep the lender at bay though. However, I'm not sure these sales help turn buyer's attitudes around if they feel that by simply continuing to hold out, the bottom is still a long way down as are their chances for a kick-em-while-they're-down bargain purchase later, which may only lead another builder down bankruptcy or foreclosure lane, turning the situation on a continued down spiral.
I do feel we're at or as close to a bottom as we can get but recognize not everyone can wait for November's election outcome or take a chance that something wont worsen our economy only to find out they should have done the sale. For those, obviously not doing something today may bring them to the point of no return later so, these sales may be their only gleem of hope.
However, I insist that, although not being a stubburn seller will go a long way in getting through these difficult times, sellers in general should be careful not to continue feeding the frenzy we're experiencing.
Be open, negotiate, sell. If 2x1 is the only way for you then, by all means do it. Just make sure all out-of-the-box options are considered first.
Buyers who take advantage of these sales of course, will be that much closer to the 4 houses = 1 hotel formula of success promoted by table games and Rich Dads.
www.MiamiRealEstateKing.com
Certified Distressed Property Expert
Miami-Dade County, Florida.