Market Conditions - April 10, 2006 by Carla L. Davis
While many areas of the country have reported that investor activity is down -- this hasn't stopped builders from forging on in building a steady supply of new home. Why so much builder confidence? The reason appears to fairly simple -- builders can offer price cuts and incentives that existing home owners and sellers cannot. The National Association of Home Builders (NAHB) reported this month, "As the NAHB draws attention to the vast benefits of new home construction during April's New Homes Month celebration, one thing is clear: while the record-setting pace of the last several years is leveling off, savvy consumers can take advantage of creative perks offered by many home builders today." They go on to say, "Buying a new home makes even more sense when you take into account that incentives and offers are giving consumers more flexibility at the bargaining table. Across the country, builders and developers have been offering home buying incentives including interest-rate reductions, prepaid homeowner association fees, cable TV and Internet access, appliances, "use-as-you-choose" spending certificates, price reductions and help with closing costs. One home builder recently offered visitors to its new developments the chance to win a diamond ring valued at $4,500. Other reports include builders offering buyers enticements such as new flat screen televisions, one year of lawn care service or a "sign today" promotion of free upgrades." With those types of incentives -- how are resale markets fairing? In Washington state -- notably on San Juan Island -- while inventories continue to increase, there has been no apparent reduction in selling prices. Buyers are, however, taking longer to decide on a property. Their reasoning? They want to make sure they are making a good investment in a market that could turn sour in the next few years and they also have more homes on the market to choose from. San Juan Island is seeing prices as much as 20.3 percent higher than last year at this time -- bringing the current average to $209,950. Whidbey Island, the continental United States' largest island, is seeing a slowdown in market activity. 2005 set numerous records when it came to real estate -- with residential sales dollars 25.8 percent higher than 2004. Prices were up almost 41 percent. Like San Juan Island, inventories are up. Buyers in this area should expect to see homes prices anywhere from the mid $100,000's to the mid $200,000's, though a large number of million dollar homes are available. | 
