Freebies Galore! Home Builder’s Incentives

Whenver I hear anyone say home prices are holding up up, I have to laugh. That’s like saying the NY Knicks are undefeated (except for their losses).

From CNN Money over the weekend comes this:

David Seiders, chief economist for the National Association of Home Builders
says 75 percent of the nation’s builders and developers are offering incentives.

Those incentives range widely. "Developers will upgrade appliances, put in a
Garland range or a Sub-Zero refrigerator," says Diane Saatchi, a vice president
with the Corcoran Group who specializes in Hamptons properties…

The Associated Press reported last week that a new San Diego condo
development, Atria, was giving away plasma TVs and $5,000 home renovation gift
certificates. Other popular options include fancy kitchen cabinets, granite countertops and
marble baths.

Some buyers, however, may just want money – and those deals abound. "Price cuts are averaging 5 percent to 6 percent," Seiders says, "and 30
percent of all the large builders have cut prices in at least some of their
developments by 10 percent or more."

So while Home prices may look the same, the net to the builder has changed dramatically — as the freebies listed below make clear . . .


Southwest Homes Ansedonia Up to $20,000 incentives on last remaining homes
Meritage Yellowstone 5 percent co-op on standing inventory
Ryland Belford $20,000 toward design center, special financing
DR Horton Twilight 3 percent toward closing costs with builder lender
Pardee Springdale $5,000 closing cost credit with builder lender
Avante Pecos Park $25,000 toward closing cost or upgrades with lender
Kimball Hill Capella Free membership to Henderson recreation center
Lennar Eagle Canyon Special buyer incentives and commissions
American Invsco Meridian HOA and taxes paid for two years
Toll Brothers Hidden Canyon Swimming pool included with some plans
Warmington Esplanade Metro Extra $5,000 incentive on Plan A
Innovative Mesa Verde $2,000 Visa gift card, six months HOA
American West Royal Highlands $15,000 to $25,000 co-op on list price
Pulte Silverstone Ranch Golf membership included offers a list of homes in Duncan, MI with incentives ranging from $6,000 to $25,000. Incentives as robust as $20k on $194, and $25k off homes as low as $294k home — a healthy 10% discount.


UPDATE: September 11, 2006 7:41pm

Alex points out in  comments that Calculated Risk is highlighting a Pulte Homes $99,000 give away on homes priced from $300K+ to $700K+.


Appliances, upgrades, landscaping — it’s all ‘free’
Builders turn to cornucopia of incentives to help keep valley’s home inventory moving
Las Vegas Review-Journal, Sep. 10, 2006

Freebies for home buyers
Home sellers are trying to find creative ways to get buyers to sign on the dotted line.
Les Christie, August 25 2006: 10:13 AM EDT

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What's been said:

Discussions found on the web:
  1. KirkH commented on Sep 11

    Hmmm, coming soon to a town near you: $400,000 studio condo with $200,000 in incentives. But prices aren’t dropping. Hmmmm.

    I thought lenders were supposed to keep incentives under 3%. Pay no attention to the mold behind the curtain.

  2. TT commented on Sep 11

    I saw an interesting one on the weekend for an existing home, $5,000 bonus from the seller to the buyer’s agent. Clever!

  3. rob commented on Sep 11

    hell a move JOE is putting on, up five bucks

  4. commented on Sep 11

    The home markets just about everywhere in North America have taken a dive. Not that this should suprise anyone. There have been people calling out the warning signs for at least a year or more now. It’s called a bubble. These incentives are adding fuel to an already dangerous fire.

  5. albiegf13 commented on Sep 11

    Kirk: This has been going on for quite a while. Builders are offering the same incentives to buyers agents, in some cases you can attain a commission of up to 20% for the 5th house you sell in a devlopment. It’s a gradual scale. This is happening all over the place in the industry…. There’s a whole lot of desperation going on and everyone is trying to keep a straight face. It’s really getting ugly out there… The fact is that we are still in the “Denial” stage. I think that we are going to skip through the “Anger, Bargaining and Depression” and get to “Acceptance” fairly quickly…

  6. alexd commented on Sep 11

    I live in small community in MI and it is obviously a buyers market. I can think of 4 houses in close walking distance that have been for sale for awhile. Not pretty.

  7. kevin_r commented on Sep 11

    Has the data always been manipulated like this? When I hear and read “housing prices have never fallen year-to-year nationwide since the depression”, were prices in past slowdowns manipulated like current data?
    Obviously, bad data is an impediment to good markets.

  8. KirkH commented on Sep 11

    People will wise up when they realize they’re paying 30 years of interest + taxes on gardening expenses. Low prices are going to win out eventually. It’s certainly interesting in the mean time though.

  9. Michael C. commented on Sep 11

    Incentives like a plasma TV should read – “Free Bonus: 30 Yr Mortgage on a Plasma TV!!!”

    No thanks. Give me a big cash discount please.

  10. Estragon commented on Sep 11

    Anyone have a sense of what’s happening with rental vacancies and pricing? You’d think that with the softening of sales, there would be increased demand for rentals, and stronger pricing. OTOH, are specs and flippers renting their stale inventory?

  11. Kp commented on Sep 11

    Louisiana residents are in quite a different situation. The local economy continues to push forward, being fed from local oil companies’ $$$ supported by exploration stemming from high oil prices. Those in the right places are making good money, everyone else is screwed. Thanks to Katrina we saw home prices skyrocket as the influx of New Orleans refugees came pooring into town….tack this on to the afforementioned oil boom and what you have is a situation with no exits. Prices will not go that low. The fed isn’t going to have the cohonnes to push rates as high as they should be, people will continue to margin decrease buy, inflation will stay with us, wages will remain flat. Hello Stagflation. Thank you Mr. Greenspan for shamelessly whoring ARM’s.

  12. Richard commented on Sep 11

    i believe we’ll see a nationwide housing decline but the level of pain will vary depending on location, as it always has. even though the coasts have ran up further and higher than the inland states i expect them to hold up better on the way down if primarily non housing related job and income growth exist (think NYC suburb). these are the keys to maintainability. on one hand so what if you paid $200k more for a house than fundamentals said you should. if you can pay the monthly nut and plan on staying for 10-15 years you can ride this wave to its conclusion. now if you bought in a speculative zone that might not work but good olde fashioned established single family home bedroom commuities with little speculative activity should weather the storm better than most other places.

    that’s a piece for those of you who need to buy today for whatever reason. beware condos!

  13. Michael C. commented on Sep 11

    I’ve been tracking the housing market for some time, and I sympathize for the “must-sell” owners.

    We are now:

    1) Entering the Fall/Winter season, where the supply of buyers will become more stale.

    2) Adjusting interest rates continue to hurt the outlook especially since as late as 2005 saw massive option ARMs buyers who’s payments will continue to rise.

    3) The strong summer months turned out to be a dud with the hot summer weather and lopsided and increasing inventory.

    4) Realtors will begin increasing the pressure on sellers to lower pricing in order to make commission as their earnings take huge hits. Lest we forget, they care more about closing the transaction than getting the buyer the best price.

    While stories abound of inventory and some price reductions. I believe the next phase will be of foreclosures/BKs of actual owners in difficult financial times. Of the homebuilders getting sued for overpricing homes sold to the peak buyers and shoddy construction. And, of the economy getting whacked more proportionately since it was such a large part of GDP.

  14. advsys commented on Sep 11

    As one who lived in the center of the Dot Com bubble I am having a great time watching the housing bubble burst.

    As you can tell from my attitude I am not at risk myself to the housing downturn having sold all my investment real estate in the last 3 years.

    My favorite of the week is the pundits pushing home builders because they are trading at a discount to book value. Hello, with land values crashing, these book values are not real!

  15. Craig H commented on Sep 11

    Interesting day today.

    The collapse in gold suggests that inflation fears are abating while recession fears are rising, yet bond prices didn’t get a lift.

    The continued deterioration in oil and its related stocks gives weight to the recession argument. Other industrial commodities were weak as well.

    With a triple-witch and inflation numbers at the end of the week, things should stay interesting. Isn’t that a Chinese curse? ;-)

  16. flower commented on Sep 11

    The prices in real-estate are going down by day and that is not such a good thing. I believe we should wait a little bit longer and see what it will happen.

  17. alex norman commented on Sep 11


    As someone else posted, check out Calculated Risk — Pulte is offering $99K off of $500K homes in Nor Cal, and Ryland offering 40% off payment plan. In the last (1989-1996) boom and bust cycle in California, it took 63/4 years for prices to fall 30%. Looks like this is going to be a bigger decline/and or shorter.

    It makes sense, because the magnitude of the price increase over long-term trend over the last eight years is 3X that of the last increase. Check the OFHEO data series chart for california metro areas on

  18. Chad K commented on Sep 11

    I come from a family who’s each member owns companies that do unique parts of each house, whether it be from general contracting, flatwork, woodwork, painting to landscaping….

    Now, home pricing in my area of the world hasn’t experiencied any sort of bubble. Inflation adjusted, we’ve seen less than 1% gains over the past 5 years. Yet, despite the cost of materials going up precipitously, the margin made on a typical house is still near or exceeding 30%. I can’t fathom what builders in Chicago and Las Vegas are making, since the land cost isn’t that significantly greater.

    What’s more amazing to me is that new home pricing in Houston appears to be VERY close to the actual cost. My only guess is that the vast number of illegal workers keeps the prices down, allowing the owners to still make a buck.

    There are builders here in town, who’re stuck with unselling houses, that are now offering packages like finished basements (1 bedroom only)…. in the average house around here that’d be approximately 15% of the price of the house. In my part of town, they went nuts with the new neighborhood. Fortunately, there is an influx of people, so if they just take a break for a season, the market will catch up… and they can resume, at a much slower pace, new construction.

  19. Steven commented on Sep 11

    They are trying to resist price declines because “…once prices fall on a widespread basis, home buyers will sit on the sidelines waiting for prices to tough” -WSJ

    “I would prefer to see builders be frugal about incentives even if it means giving up sales” – Morgan Stanley’s Rob Stevenson

    If I was in the home building business I would be a renegade As all the other builders were holding prices high, I would undercut them and take all their sales!!
    Screw incentives, just cut prices you oligarchs!!! Its better for the consumers

    I am referencing an article from Sunday’s WSJ “Housing Boom Is a Memory: Lennar….”

  20. whipsaw commented on Sep 11

    per Craig H:
    “The collapse in gold suggests that inflation fears are abating while recession fears are rising, yet bond prices didn’t get a lift.

    The continued deterioration in oil and its related stocks gives weight to the recession argument.”

    I am thinking about starting a financial advisory service that many of you may be interested in. It is based on me telling you what I just bought so you can do the opposite. :)

    A few weeks ago, I bought January XLE calls which went to hell, so I dumped them once it dawned on me that the memo has gone out about oil prices until after the elections since I just didn’t want to babysit them. So last week I bought GDX calls in the belief that gold was probably going to rise and…

    I thought about dumping GDX this morning before the bell, but the calls don’t expire until March and there’s bound to be some calamity or other in the interim and I don’t care to eat another oops!, so I think I’ll just ride them out.

    But I like the advisory idea- I get a subscriber pool that prepays $X for a month as a retainer, I give my real time trade info for you to go opposite of, and then at the end of the month, I take double what I lost, divide it by the subscriber base, and deduct that from the retainers and you have 10 days to bring the balance back up to $X or your account is cancelled and you get whatever is left on deposit, prorated for the current month. Win, win! To the extent that I actually make any money trading, there is no charge! :)

    I’m thinking about calling it and putting it offshore to, er, avoid regulatory entanglements. Sweet deal, n’est-ce pas? And Barry better not steal the idea!

  21. bill the barber commented on Sep 11

    Hey I thought I was the only guy with that kind of luck….damn!

  22. whipsaw commented on Sep 11

    per bill the barber:
    “Hey I thought I was the only guy with that kind of luck….damn!”

    Nah, if people told the truth, they’d acknowlege lots of goat f*cks (army term) but they don’t and won’t, so we go on. But that’s what trade sizing is all about and what surviving is all about. If I catch a bad streak, then I make my decisions and move to the next table.

    The market dice went cold on me lately, but I am off to Tunica tomorrow to kick some c*sino ass! :) Prolly come home with a million bucks- or have to sell my car cuz I can’t pay for gas to get home. :P

    Should be a cleansing trip.

  23. spinning_head commented on Sep 11


    don’t feel bad..I bought the ‘fakeout breakout’ last Tuesday and Wednesday on gold. Can’t say I’ve ever been beat up this bad this fast on anything.

    But, EVERY blogger on gold was affirming early last week that THE BREAKOUT IS HERE>>>WE’RE GOING TO SEE A SPECTACULAR RUNUP

    there’s a LOT of company for us out there…lol

  24. Mike commented on Sep 11

    Energy prices falling, interest rates topping, valuations at their lowest levels in over a decade, balance sheets strong, the economy growing at a non inflationary rate. I think that we will not only have a strong fourth quarter, but we’ll have a gangbuster move in 2007. Just need to get through September.

  25. whipsaw commented on Sep 12

    per spinning_head:
    “there’s a LOT of company for us out there…lol”

    Lots of company but not much comfort; the odd thing is that I usually ignore gold altho I have made some money off of gold trades on Oanda and messing around with ABX from time to time.

    Anyway, lesson learned, there is no upside in this market so unless you want to ride something for a year or two, you either stay out or go short (altho I do have 20 very cheap QQQQ call contracts in anticpation of some lunacy between now and November).

    In fact, as the “data” such as it is comes in, I’d say that Barry is only going to miss his crash prediction by about 5 months or so which is the same as a win in this business. I don’t say that based on any particular metric, just riding around and seeing what’s going on which is something that I would suggest that BB might try even if it is in a limo. I see things I haven’t seen since 1991, like houses and commercial construction sitting half-finished for six months.

    That happens when the developer can’t get a draw from the lender and can’t pay the contractor because the work is not X% complete in somebody’s opinion. It generally isn’t complete because somebody in the food chain ran out of money which sets off a cascade of defaults.

    If you think that residential stuff can tank overnight, just wait until the high rise commercial stuff goes south- at that point performance bonds get called, the lenders start firing anyone who knew about the loan, and you better hope that the particular project was not securitized in some private placement or everybody on earth is going to be sued for fraud.

    Been there, done that (as a construction litigator) during the last Great Recession.

  26. tjofpa commented on Sep 12

    What better way to commemorate the day than with a commodities flush. I’m sorry about your timing but I had been waiting for a chance to get back in. Bought NEM yesterday. Hang in there.
    With CAN$ partying like its 1978 I believe we’ve got 2 years yet to run.

    Thanks Hank

  27. teraflop commented on Sep 12

    Another major industry comes to mind when I think of rebates: the American auto industry.

    I don’t compare the magnitude of the rebate industry between auto and housing. The rebates in housing have more to do with marketing sub-contractor discounts on more short-term items compared to that of the auto industry.

    But a rebate is a rebate, the rebate becomes a marketing expense, separate from revenue so that Price/Share is supported. The Income Statement gets temporarily juiced which just defers the day of reckoning for investors and those poor poor (though they don’t yet know it) recent home buyers.

  28. Cherry commented on Sep 12

    Sorry Mike, nada. Energy prices, again, they HAVE NOT been a big deal. Literally, the most overrated “hype” I have seen since the Mexican “crisis” of 97.

    Recession in 2007.

  29. Realtor Marketing commented on Sep 12

    I have seen some places around the country where house prices may be staying up a bit but that is because there are a lack of sales and there are some sales in the higher end of hte market.

    There are piles of listings everywhere and I imagine that sometime over the next few months we are going to see an exagerated drop in prices.

    Only time will tell if I am right

  30. B.Jones commented on Oct 30

    Don’t forget the GOVERNMENT! Tax assessments set the base price and seem to only go UP. Also, for some strange reason, builders hate to sell a $300,000 house for $240,000. I told others about getting a 20% discount by going directly to the builder and asking for one. They wanted the same deal from him. On the other hand, giving the customer a $10,000 extra room that cost the builder only $2,000 keeps the house price up and the customer happy for very little cost.

  31. DellGuy commented on Nov 12

    Hey, has anyone else heard of this new builder incentive called Pictured Home, my builder offers this service. Pictured Home is going to take digital 360 pictures of my new home during the entire construction process. I can log into my own personal account at to view the photos.

    Other cool things are you can store information about your home’s flooring, paint color, trim work on the website. I have two kids and I am constantly painting spots where they write on the walls with their crayons. Now I can store the manufacturer and color code of the paint, so I can find it easily at my hardware store.

    Also, Pictured Home can capture an entire inventory of your home’s valuables for insurance purposes. A couple years ago, my home was flooded and I had to replace my big screen TV but I lost the receipt and didn’t have a photo of the TV. I fought with my insurance company for months to get them to cover the cost of the TV.

    I’ll post an update when I receive my first set of photos.

  32. Clint Arthur commented on Sep 3

    Check out this one: The Ultimate Gay Man’s Loft-Style View House in the Hills of Los Angeles comes complete with HOUSEBOY!

  33. Thoughts From The Frontline commented on Oct 20

    That Stubborn Yield Curve

    Introduction There is an arcane debate going on in economic circles. How fast can the economy grow without

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