Need a house soon, too early to wheel and deal?

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gasjockey_IHB

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<p>Sounds like everyone is in agreement that the housing market is going to take a hit. How big? Some people are estimating up to 30% from what I've been reading. I know some markets will be able to weather this out. So my question is the following: I need a house! Wife and I have been renting for the past year and she is getting frustrated. She wants to be settled in a house. However, I think waiting another 6 months or so will pay off when home prices start declining. We have our eye on a couple of high end new construction deals. One that starts at $1.4mil and the other at about $1.5mil. Both have not yet been built but they are taking orders. Demand seems low and many units are becoming available as buyers are backing out. There is also an already built house for $1.7mil that I like too. </p>

<p>Is it too early to make an offer based upon the belief that prices are going south and mortgages are getting harder to get? Would they laugh if I offered $1.1mil with $300,000 cash downpayment? Should I wait til they are built and pray no one buys them and then scoop it up for a discount then? Or should I try to lock it in now? Basically I want a house now for next years price. Any advice on how to try and get it?</p>

<p>GasJockey</p>
 
One thing to consider is that many of the builder pay broker coop. They pay up to 6%. Consider taking an agent to see the house with you. Most likely, the agent can give you a big kickback. In addition, many of the builders are giving lots of discounts. See what they are offering. For example, K. Hovnanian are lowering the prices of their Skye Isle Model Homes from $2,879,900 to $2,149,990 on Plan 2C and $2,599,900 to 1,999,900 on Plan 3ER. I don't see why you can't negotiate with builders especially with all the crazines in the lending industries. Good luck.
 
Wait! Tell the wife that patience is better than prolonged financial distress.



More ARMs reset in the first 6 months next year than all of this year, particularly in Feb-Mar.
 
Given the state of the credit markets, have a loan commitment from a lender in hand for the maximum amount you can borrow.





Lennar, and maybe some other builders, will sell their models on a leaseback basis. You buy the home, and they lease it back for a certain time (or until a certain event occurs) and their lease payment equals PITI. Or something like that. I don't know all the details, but have heard it is done. Perhaps some other builders do it as well. This doesn't help you with move-in, but would with purchase.





I got a couple of e-mails today from KHov stating that they are deep discounting their Skye Isle and Capistrano models at Covenant Hills.





HTH.
 
gasjockey,



Not sure which area you are looking at. If you are looking at Ladera / Convenant Hills, I think their adjustments will be greater than Irvine. More and more people are realzing the traffic going in there, and the lack of shopping, eating, etc. don't forget, CH has a 400 / month association due.
 
<p>Make an low ball offer. What is the worst that can happen? They may sneer at you? As they are sneering, just remember that you have 10 times more in liquid assets than the person sneering at you and they cannot afford to spend what you are proposing, so a sneer is all they have.</p>
 
<p>Sometimes I feel that these homebuilders will sooner layoff their own employees than take a lowball offer. I don't understand why and who exactly is making that decision, but I've encountered it many times on my end. </p>

<p>I'm all for lowball offers, but even now, I will admit people, like awgee said, are still sneering at them. It almost makes you think that when they finally stop sneering at them that will be the bottom and everyone should get into a home, any home, at that point.</p>

<p>ELS - I got those khov emails also regarding their mcmansions. All inclusive Skye Isle home reduced from 2.88M to 2.15M and from 2.6M to 2.0M. Capistrano home reduced from 1.95M to 1.6M and from 2.1M to 1.7M. All with full 6% coops. Good luck Khov. The only ones salivating at those homes are any termites that are lucky to be in the area.</p>
 
<p>They sure are beautiful though - among the best in Orange County.</p>

<p>The Capistrano project is right under the wires though.</p>

<p>The Skye Isle plan 2 is the most gorgeous model home I've ever seen. </p>

<p>I think it's a steal at the new price. With the 6% coop it puts it around $340 psf.</p>

<p>The thing is landscaped and loaded to the nth degree. Very, very tastefully done too.</p>

<p> </p>
 
The price drops on the Skye Isle models are -25% and -23% plus the 6% broker co-op. But the high end home market will be immune from price reductions, right?
 
<p>I am encouraged by the recent drop in housing prices by khov. You're right, what's the worst thing that can happen is that the say no. Anyways, I'll keep you all updated.</p>

<p>Gasjockey</p>
 
<p>Why is your wife so set on buying a house now? Is the issue with not being able to find a house to rent and she doesn't like an apartment, or her wanting to make changes to her environment that she can't do if she doesn't own?</p>

<p>It's not really my thing, but I understand other women who really want to be able to paint walls and stuff. If that's the issue, can she try scrapbooking? I rent, and I'm perfectly happy covering the walls with collage picture frames and paintings from our travels. </p>

<p>If the issue is space, that's a different story, and I hear her on that one. Some will say to move to a bigger place to rent, but I have already made it clear to my husband that I hate moving so much that the next place I move to will be a house we buy and plan to stay in a long time. However, I'd rather have less space than financial troubles.</p>
 
The important thing to remember about those KHOV model home price reductions is that they are still making a profit; the asking price was inflated to begin with, based on all of the artificially high costs of builder upgrades. They likley arrived at those wishing prices by tripling or quadrupling the actual cost of the upgrades they put in. Those homes (at least Capistrano, not sure about Skye Isle) are still $200k more than what the un-decorated Capistrano homes were sold for. So you can't really say prices are down 25% because a builder slashed asking prices on the last two model homes in a new community.
 
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