Daybreak Real Estate - A Guarantee
An article about new homes in Utah states the number of permits taken out in January are at a 17 year low and 74% below last year. On top of that, the number of unsold new homes is also at a record high.
Even with the drop in new-home construction, though, Newreach is estimating that it will take 10 months to sell the county’s inventory of new, unoccupied homes - even if no new homes were constructed during that time period.
Enter Daybreak, the master planned community on the West Bench that is owned by Kennecott Land. This is a popular community with a number of contributing builders offering a wide range of housing from condos to large homes. All the builders, save one, are offering price guarantees in a promotion that started in January.
Many builders,
struggling to cope with the downturn, continue to offer incentives to lure buyers. At the Daybreak residential development in South Jordan, all but one builder - Richmond American - has agreed to participate in a Smart Buy program, designed to create interest among prospective buyers.
The program, which debuted in January and runs through April, offers buyers a price guarantee. If anytime between signing their contract to a buy a home and closing the base price on the model goes down, the buyer will be refunded the difference at closing.
Jennifer Hurst, director of marketing for Kennecott Land, said the program is designed in great part to address the issue buyers who are worried about falling home prices.
The funny part is last year I had a conversation with Ms. Hurst about builder prices. She was explaining how builders construct in phases and raise prices with each completed phase. She stated, “Prices of new homes always go up.” I responded, “No they don’t.” Here we are eight months later discussing a promotion, that she probably came up with, addressing the falling prices of new homes.
To be fair, builder discounting and incentives, coupled with lower interest rates are stoking interest in new homes a little. February’s builders report indicated more traffic through model homes on a national basis as well as a slight up tick in builder confidence. Locally, this trend is holding true as well.
“I’m already getting anecdotal evidence from builders that there’s more traffic in model homes, compared with the third and fourth quarters of ‘07,” Dowdle said.
My friends in that side of the business confirm this as well.
Unless prices start coming down in existing home inventory, new homes in Utah are going to look particularly attractive.