Builders take steps to make new homes more affordable
Builders take steps to make new homes more affordable
The housing market has certainly changed over the past few years with trends emerging out of the weak economy.
Buyers have become more cost-conscious, leading to to one trend: an increased emphasis on energy efficiency. In addition, many builders are constructing smaller homes now, with open floor plans and fewer walls to reduce costs.
With builders taking steps to make their houses more affordable, there are a number of things potential buyers can look for when they want to open the door to a new home.
Today, many homebuilders offer free upgrades and incentives to help buyers take advantage of mortgage rates that still hover near historic lows.
Some builders offer reduced prices on move-in-ready, or immediate delivery, homes. Pre-sales and closeout prices also offer savings for buyers.
Another example: Lennar Corp. is seeing sales from its St. Patrick's Day promotion that extends through the end of March.
"The key is that people can get into a new home for $894 a month, less than many people pay for rent," said Doug Bober, division president of Lennar's Chicago division. "This is a big thing now because rent prices are up and interest rates are low."
The promotion is based on 3.75 percent interest and a $4,900 down payment. The monthly payment includes taxes, and mortgage and homeowners insurance.
Lennar is now building Trafalgar Woods, a townhouse development in Morton Grove.
Here are more offerings from suburban builders.
Move-in-ready homes are the cream of the crop of builder incentives. Many builders put up "spec" homes based on speculation that people will purchase the homes and move in quickly. To reduce inventory, builders offer them with set upgrades at a lower price than if customers built the home with the same upgrades.
Move-in-ready homes are also available when a community is almost sold out. Nearing closeout of its Oak Ridge subdivision in Elgin, U.S. Shelter Homes features two quick delivery homes, one complete and one to be finished the end of April. Both homes include upgraded cabinetry with granite countertops, wood floors, fireplace, and one has a walkout basement.
"These are both priced at an attractive value compared with building from scratch, and we invite people to come out and take a look," said John Sorenson, vice president of U.S. Shelter. "They are priced to move."
Also, the community has three single-family lots to be built on at competitive prices and two townhouses nicely appointed with wood floors and all the bells and whistles that back up to the park. "These are attractively priced for quick closing," Sorenson said.
As Phase II construction begins at Millbrook Pointe, a luxury townhouse community in Wheeling, Northfield Group Ltd. has a few move-in-ready homes that are completely finished. These exclusive homes feature full brick and stone exteriors and Pella windows.
With the average new homebuyer spending about 10 percent of the purchase price on upgrades, reduced option prices are a popular incentive.
Millbrook Pointe offers $10,000 worth of upgrades at no additional cost through the month of April on the purchase of a new home.
"We'll work with our buyers. We can customize. We want to make sure the unit is what they want," said Gary Levitas, president of Northfield Group. "Some have basements, and one unit features the option of a master suite on the main level."
Likewise, at Mill Creek in Geneva, Shodeen Homes offers half off options up to $20,000. If buyers select $20,000 worth of options, they will receive $10,000 worth at no extra cost. "It's working out pretty well," said Diane Durpetti, design center director. "We're getting a lot of dirt sales, which is nice."
We've also added a lot of options as included features, Durpetti said. Homes in Mill Creek's Oakmont neighborhood now include as standard granite countertops, stainless steel appliances and new energy efficiencies. They have also added flooring upgrades and brushed nickel hardware as standard.
The builder has also made some structural changes with larger showers and foyers in models at both the Oakmont and Tanna neighborhoods at Mill Creek. They are even framing and insulating all their basements.
"When people see more included features that they like, they want to come out and take a look," Durpetti said. "We wanted to bring in some new features to make things more interesting and to set ourselves apart from other builders."
Lennar, known for its "Everything's Included" concept, gives homebuyers the best value possible by purchasing the most desired luxury features and upgrades in large quantities and including them in every home. This is much more cost-effective than if one were to add these items a la carte, Bobersaid.
"In today's economy, value is important especially with first-time buyers. With our EI program, we are able to offer more home and more luxury features for the money."
Buyer assistance programs
For move-up buyers or downsizers who cannot sell their existing home, Lexington Homes has launched a new program with Marketplace Homes allowing buyers to purchase a new home while leasing their current one.
"It has enabled us to capture some sales we wouldn't have had," said Jeff Benach, co-principal of Lexington Homes. "Otherwise, the only way those "stuck" in their homes would be able to move is when the market gets better. This is an opportunity to move that timetable up.
"Another incentive is that Lexington will pay a buyer's mortgage for six months This option is available only for those who don't use the Marketplace program."
The program is available at Lexington Square, a community of 39 luxury single-family row homes in Bridgeport, and Lexington Park, a luxury townhouse community in Des Plaines.
Another way for buyers to save is to buy a custom home without the custom price. William Ryan Homes is taking its existing product that they build in subdivisions and dropping it in infill locations such as in Glen Ellyn or Roselle at a lower price and in a location where you could only get a custom home, said Debbie Beaver, vice president.
"For example, we took our 3,200-square-foot Jackson model and dropped it in Downers Grove and priced it at $430,000. This is a great value because you can't buy anything in Downers Grove for less than $550,000."
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