Foreclosures Undercut Builders

By Kevin Spak,  Newser Staff
Posted Mar 11, 2009 11:00 AM CDT
"Buyers think they are going to get the best bargain with a foreclosed house, and they aren't even looking at new homes," one California realtor said.   (AP Photo)
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(Newser) – Foreclosures and other vacant homes make this a tough time to be a builder, the Wall Street Journal reports. Consider Pulte Homes, which is selling a new, four-bedroom home in Las Vegas for $214,990—while a short sale nearby offers a similar Pulte-built home for $149,999. “We are no longer competing with other builders,” said one KB Home exec. “We are competing with foreclosures.”

New-home sales fell to a 40-year low in January. “I don’t know how the builders are going to compete,” said one analyst. KB slashed its average home size in half, hoping small, cheap houses can compete with foreclosures. Most say they won’t move on price, instead offering perks like low-rate mortgages and up-to-date features. “It’s not all about price,” said Centex’s CEO. “It’s about value.”