Base prices for new homes lower than last year (Austin: days on market, sales)

[2austin]

I was checking the base prices for new homes in 500-700k range in Lakeway and they seem to be about 20-30k lower than last year. Unless the builders are now charging more for the lot premium these trends would put pressure on existing home sales in this side of the town which in the past has seen reasonably healthy appreciation.

Any ideas what are the builders thinking this year?

[Derek ATX]

This could be true but I think it needs a little more research. What will really effect prices is the sold comps. So, if the builder is setting a base price and it is lower than last year you have to take a look at what the base price includes. When my clients want to buy new construction I find them homes that are are around 5% to 10% under their price cap to account for "options" in new homes that will increase the price from the base. Homes in this area of town have traditionally seen good appreciation, however they have also traditionaly been quite longer days on market than areas in the same price range closer to town. I know that in other areas base prices have gone up, and other places have gone down, but builders have ways of making homes look more inticing as to price but keeping their net the same. You already mentioned one of them, higher lot premiums. I would love to know where you got the stats from so I could look into it myself.

Derek

[llkltk]

Not going to happen. Maybe in some areas. In SW Austin, homebuilders are raising prices in the new phases. If they lower, they most likely will cut features.

[AustinGuy]

Originally Posted by 2austin

I was checking the base prices for new homes in 500-700k range in Lakeway and they seem to be about 20-30k lower than last year. Unless the builders are now charging more for the lot premium these trends would put pressure on existing home sales in this side of the town which in the past has seen reasonably healthy appreciation.

Any ideas what are the builders thinking this year?

20k-30k is almost a rounding error on houses in that price range. Since the market is a bit sluggish, I wouldn't be shocked to see builders lowering their price that much to clear inventory and get new projects moving.

During the last downturn in 2001-2004, Lakeway was particularly sluggish, so we could see a similar situation play out this time. Maybe.

[2austin]

Originally Posted by Derek ATX

I would love to know where you got the stats from so I could look into it myself.

Derek

One of stats is from the builder Taylor Woodrow in Senna Hills Subdivision. Compared to last year, the base prices of all of their plans is about 15-20k less.

I agree, the builders may make up this difference in more expensive upgrades and higher lot premiums or by cutting down on standard amenities.