Hovnanian Enterprises Inc. (NYSE: HOV) deserves kudos turning lemons into lemonade. This weekend, the upscale homebuilder had a "sale" where lucky home buyers could get about $100,000 in price cuts through incentives, upgrades and add-ons. Media reports indicate that it was a huge success.
Thousands of people lined up at Hovnanian developments in 19 states over the weekend for what the company dubbed as "The Deal of the Century," according to CNBC. You can bet that other home builders including Lennar Corp. (NYSE: LEN) and Toll Brothers Inc. (NYSE: TOL) took note of Hovnanian's success and will follow suit. Banks stuck with huge amounts of foreclosed properties might also start to get creative as well. It's a good sign but people shouldn't expect miracles.
Pundits, ranging from Alan Greenspan to your neighborhood realtor, will tell you that the housing market is terrible and won't rebound for at least a year. People with adjustable rate mortgages that are about to set higher are in a world of trouble. Debate rages on how much the government should help people who wound up in homes they couldn't afford by predatory lenders, their own naiveté or a combination of the two. People who bought multiple properties in the hops of flipping them quickly shouldn't be bailed out.
It's important to remember, though, that the real estate market hasn't ground to a halt. Deals are getting done though not at the levels people would like. Homes are selling provided that they are priced correctly. That means priced at a level where comparable homes currently are selling not where they sold at the height of the bubble.
Individual homeowners, though, should resist the temptation to be too much like Hovnanian. Don't be too quick to offer sellers loads of goodies or shell out thousands of dollars toward closing costs otherwise you will look desperate. Remember, even in this horrible market everything is still negotiable.
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Reader Comments (Page 1 of 1)
9-17-2007 @ 2:50PM
AnyGoodDeals said...
No buyers here. Fool me once shame on you, fool me twice shame on me. I'll just sit here in my overpriced home seething at the appraiser.
9-17-2007 @ 10:40PM
LOU RUSSO said...
Just called my merrill lynch to turn dog stocks to cash and buying every new construction specials in chas. sc. my investor clients doing the same. Yeah play with your cash. One client Wall St. head of major player tell you buy stocks, bonds and he I just got him another investment property with builder incentive give aways. I hope the builders do a Hovanian here in Chas. Sc. They have come close and I'm just waiting for a MAJOR give away. That's where my cash is going.
LR Chas. Sc.
9-19-2007 @ 10:46AM
wildbill said...
Lot of hype. Promotion is a wonderful tool. I am sure that they had a lot of lookers, but who ACTUALLY bought. Hovanian has no legal obligation to tell the truth. At present they appear to have cash flow problems. If the sales reports are real than this will show in their next quarter results. Wait and see, if they run another sale, one does not have to be to bright to guess the answer.