Monday, October 01, 2007

Tightening Credit Causing New Home Cancellations

Cancellations on Las Vegas new homes are rising around the Valley. Home Builders Research released statistics showing that the cancellation rate on purchases of new homes in the Valley jumped to 53 percent in August.

The rate had been closer to 30 percent two months ago before lenders starting tightening credit. Lenders are requiring higher credit scores, and those who don't have good credit are required to put down a greater down payment or pay higher interest rates. Even people with good credit are finding it harder to get jumbo loans of $417,000 and above. Those who can't document their income are also having difficulty getting loans.

"Buyers are certainly not canceling because they are changing their minds," said Dennis Smith, president of Home Builders Research. "They are canceling because something has changed in their monthly payments."

The good news for patient buyers who were waiting for the real estate market to bottom out is that builders have drastically lowered their prices and are offering incredible incentives in order to move inventory. And a few Las Vegas top real estate agents are negotiating even better deals for their buyers than the tracts are initially offering based on the volume of buyers they are able to bring to the tract. Smith reports Meritage Homes lowered prices in some of their subdivisions by $50,000. And Rhodes Homes is selling homes for $125 to $130 per square foot, way below 2005 levels.

But despite current soft market conditions, Las Vegas is continuing to grow at a rapid pace, and reports say recovery is likely to come faster here than in any other city in the country. A large shortage in labor and a retiring baby boomer generation spell a large population increase in the imminent future which should effectively eliminate the housing surplus and return the market to balanced buying and selling conditions. In order to take advantage of the existing builder discounts, contact our office at 702-985-7654 and ask to speak to one of our new homes specialists.

Post a Comment