Incentives Abound For Palm Beach Buyers

Janis Joplin once crooned that all she wanted was for someone, Lord, to please buy her a Mercedes-Benz.

Well, if Janis were still around and testing the Palm Beach real estate market, she could experience that without any sort of heavenly plea. If you buy an Ecclestone Signature Home, the leased luxury car will be waiting for you in your garage, writes Linda Rawls in today’s Palm Beach Post.

Following a year in which local home builders couldn’t build fast enough to keep up with demand and appreciation skyrocketed by 20 percent or more, new home sales are slowing and cancellations are rising in the area. This shift is prompting builders anxious for sales to offer everything but the kitchen sink… and probably the kitchen sink also.

Fancy cars, free granite countertops, stainless steel appliances, cash. Done, done, done and done.

“Hurry Home One Day Sale!” boasts an ad in Wednesday’s Post by the Lennar Corp., a giant area builder which has been in business for more than half a century. The advertisement states that if you buy a home on Saturday, July 22, you can claim “your share” of $8 million dollars being given away! Any reasonable offer will be accepted, too!

More closely resembling a department store clearance sale than a real estate ad, it also offers food, fun and amazing savings! And special financing, of course. The Lennar advertisement features nine new-home communities from Montreux near Boynton Beach to Woodfield in Vero Beach. This is the latest example of the rising trend of builder incentives.

But experts say buyers who show up Saturday expecting to be handed a million bucks are going to be disappointed, not surprisingly.

“Lennar is not giving $8 million away. They’re a public company and their stockholders would go ballistic,” Bill Hall, director of New Homes and Communities by Illustrated in Palm Beach Gardens, said.

Lennar is reacting to a Florida housing market slowdown, however, and trying everything it can to entice buyers, exactly what the home builder said it would do in its quarterly earnings report.

“Builders are trying to combat a lethargy that’s probably caused by people being afraid of buying a house today and finding out the same house is priced less in two months,” said economist Bradley Hunter, director of MetroStudy’s South Florida region. “Lennar is basically saying ‘make an offer,’ figuring that’s a good way to make people feel comfortable that they can get a good deal.”

Industry analysts say builders all around the country are resorting to incentives to spur sales. Home builders also are cutting their earnings forecasts as shares slip from the record highs of 2005. Also at issue is lingering concern the Federal Reserve will raise interest rates another quarter-point to 5.5 percent at its August 8 meeting.

However, despite fears that another rate hike is coming, and that it would lead to higher Florida home loan costs and decreased demand, there were encouraging signs Wednesday when Fed Chairman Ben Bernanke told Congress that the U.S. central bank might pause for now, sending markets sharply upward.

Regardless of the Fed’s upcoming move in August, fewer buyers on the market mean an increase in inventory. The measure of inventory for new homes in May stood at 5.8 months, according to Economy.com, the highest since 1996.

The slowdown is more noticeable coming on the heels of record-setting sales in 2005, a year that saw prospective new-home buyers throughout Palm Beach County and the Treasure Coast practically camping out overnight to get the homes they wanted. It’s little wonder that home builder optimism has hit its lowest point since December 1991.

The National Association of Homebuilders says its Housing Market Index, which measures builder confidence, has fallen 33 points from its recent high a year ago. Nevertheless, area buyers are not going to see prices tumble the way they might like. But Realtor Sarah Mazor, of Mazor Realty, says it’s still a good time to buy.

“There are deals out there. This is the time to do it before the market gets back to a normal pace and these incentives disappear,” said Mazor, a buyer’s agent who specializes in pre-construction and new construction.

A lot of condo conversions are waiving developer fees or paying the first year’s Florida home mortgage loan payments. One large builder is offering $30,000 at closing or 3 percent of the purchase price, while others still are pledging to sell homes at lower prices if they go down after the buyers signs their contract.