Friday, August 25, 2006

Are Seller's incentives disguising market weakness?

Here's an interesting piece from the NYTimes regarding the various incentives that home sellers are providing to buyers amidst the slowing real estate market. The piece starts with a story about a Northern California family with a house on the market who is offering to give potential buyers 1 week at a timeshare for life as an incentive to purchase. I know a lot of the condo developers in the city here almost always give away a flat-screen television to buyers.

The interesting broader market question the piece begs is, how are these incentives disguising the real weakness of the real estate market? Because despite the various negative stories we're seeing in the real estate market, median home prices are still slightly higher year-to-year. But, are they "really" higher or did the listing price just remain high and the seller gave the buyer a $10,000 in-ground swimming pool??

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