Prices slashed as market cools

Palm Beach Post Staff Writer

Sunday, November 19, 2006

From the trios of queen palms in the front yards to the unblemished Spanish tile roofs, the houses on Fleming Way are almost indistinguishable from each other.

They sit on a just-built Martin County block south of Stuart where children glide on scooters alongside stroller-pushing moms, and where residents occasionally greet each other as "neighbor."

But the prices buyers paid for the brand-new homes on Fleming Way tell the tale of what happens when a market cools.

In a handful of deals during the last several months, Miami-based builder Lennar Homes slashed prices on the street by as much as 51 percent, unloading the last of its houses in the Martin's Crossing development to select investors.

That means residents such as Mark and Kim Andersen, who locked in $506,400 when they signed a contract for their five-bedroom home in early 2005, are living just down the street from a nearly identical five-bedroom home that Lennar sold to another buyer for $250,000 in late October.

Industry experts say big price cuts aren't uncommon as builders look to make sales in a sluggish market what's striking in the case of Martin's Crossing is their magnitude.

"Generally speaking, I think a lot of these discounts we're seeing today are kind of shocking," said Alex Barron, a San Francisco-based analyst who covers the building industry for JMP Securities. "And they're much more aggressive, I think, than most people realize."

From Palm Beach County to Indian River County, many big national homebuilders are heavily discounting prices with the biggest cuts showing up on the Treasure Coast, said Brad Hunter, a housing economist for West Palm Beach-based Metrostudy.

"They're offering extraordinary value, just to get rid of the standing inventory," Hunter said.

At the Links at Emerald Dunes, a Lennar development off Okeechobee Road in West Palm Beach, the builder is offering new three-bedroom condominiums for $239,900 more than $85,000 off the original asking price.

"I think with the prices at this level, anybody who needs to buy a house should be looking now at these deals," Hunter said.

South Florida is a hot spot, but other regions also are seeing the same. Price reductions of up to 35 percent have hit the books in Lennar and KB Homes developments in Tampa and Washington, D.C., Barron said.

He and Hunter said the Martin's Crossing reductions are the biggest they've heard.

"I guess the idea is that these builders just want to unload inventory in order to generate cash flow," Barron said. "But it's hard to tell whether such deep discounts are necessary or not. Certainly, I think some of these people that bought previously must not be thrilled."