SAHBA News, May/June 2009
WHAT? YOU WANT APPLIANCES WITH THAT FORECLOSURE?
In many neighborhoods around town, streets are sprinkled with Foreclosure For Sale signs. And while the deal outside may look great and the price is hard to beat, some of those foreclosed homes come with risks for buyers. "Even if the house is not stripped (of appliances, flooring, toilets), most likely the previous owner didn't have the financial obligation to maintain the home, so there is no maintenance on the property," says Jill Jones, Sales & Marketing Manager of Lennar.
Not only do foreclosure hunters not know what they're getting into with repairs and maintenance, they don't have the warranty protection that comes with a new home. "It's very frustrating when paying a lot of money for something and there is a problem," says Charlie Bowles, Vice President of Marketing and Sales at Diamond Ventures. "You want someone to take care of it with no hassles and without handing you a bill."
To compete with the foreclosure market, several builders have created programs to address today's market. Pepper Viner Homes has implemented four new programs including:
"My sales team and I meet every week to discuss our prospects, how to move them through the sales funnel, and how to overcome today's objections," says Pepper Viner Sales & Marketing Manager Roni Benge.
KB Home is tackling the foreclosure fiasco head-on with its new Open Series homes that start at $89,999. It's rooted in the tradition of focusing on selling clients uncompromised dreams. Other builders are targeting certain demographics to drive traffic to their communities, such as TJ Bednar & Company. CFO Brock Qualls is targeting apartment renters, first-time home buyers and slight move-up buyers.
"We are making people-especially renters-aware that they are missing out on a huge opportunity to buy a new house," Qualls says, adding that TJ Bednar has a special niche in the market with its energy-efficient, green-building philosophy and strong belief in its authentic Southwest designs. In the last two months, TJ Bednar has sold seven "dirt starts" while up against foreclosure sales, "because of the (clients') belief in the product," says Qualls.
"You want your dream home when you are spending a lot of money," says Jones. "You want to spend money on something you're going to love and be at home with, as opposed to the bargain of the century."
IMPACT FEES AND SURCHARGES ADD 14.5%TO SALES PRICES
During 2008, government-imposed fees, taxes and surcharges added about 14.5 percent to the sales price of new homes in the Pima County area. Government surcharges now average $27,587 per new home. Without these charges, the median price drops to $189,806.
The 2008 baseline was for a typical 2,100 square-foot, new-built home at a median price of $217,393, based on an updated study by an independent analyst.
"During this recession, government fees that raise costs on new homes have a negative, devastating impact on demand," says SAHBA Vice President Roger Yohem. "As consumer demand falls, job losses in the housing industry accelerate and ripple through the entire community."
According to economists at the National Association of Home Builders, every $1,000 increase in home prices puts home ownership out of reach for about 833 local citizens in the Tucson MSA.
