Home Builders Lure Buyers With Incentives

Feb. 16. 2006 — -- For years, the best deal you could expect in a Sunday newspaper was a special on canned soup at the local supermarket or an end-of-year price cut at the local car dealership.

But thanks to the changing real estate market, consumers are finding great deals on what is, for many, the biggest purchase of their lives.

Centex -- one of the nation's largest home builders -- has been running full-page ads in papers from Virginia to the California coast touting limited-time offers of $150,000 off a new house.

The company is hoping the steep discounts will lure hesitant buyers into their model homes and sales centers at a time when mortgage rates are rising and the growth in home values is petering out.

"Our 12-hour sale is their one and only opportunity to save up to $150,000 on that new home they have been dreaming about," boasts one of Centex's ads in Sacramento, Calif. "Our sales offices will be open until 10 tonight so that everyone has a greater opportunity to tour our models and select their favorite home."

Centex isn't alone. Inventories of homes for sale have gone up by more than 20 percent in the past year, shifting market power from sellers to buyers. That means innovative, sometimes unbelievable, incentives for buyers are becoming almost as common as "For Sale" signs in the real estate landscape.

"I think we'll see many builders offering incentives over the next three to six months, maybe the next year," said Bernard Markstein, director of forecasting for the National Association of Home Builders. "Eventually, the supply-demand equation comes back into balance, and then the need to provide incentives will disappear."

The deals are as varied as the styles of homes. Some buyers are walking away with $10,000 gift cards for furniture and electronics stores when they get the keys to their new homes.

Special financing deals are becoming commonplace as the publicly traded home builders like KB Homes, Pulte and Lennar package financing with the bricks-and-mortar at the core of their business.