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NEWARK, N.J. – Hovnanian Enterprises Inc., under pressure like other home builders, is offering six-figure discounts on some of its properties this weekend as it tries to draw interest in a slumping market.
The sales blitz involves dropping prices by more 20 percent on some of its prime real estate.
The largest discounts are on the most expensive homes, including a three-bedroom condominium by the Hudson River in western New York, which has been reduced $240,000, or 22 percent, to $862,000 this weekend. A 25 percent discount is being offered on a two-bedroom home in Jackson Township, N.J., which lowers its price tag to $300,501.
Hovnanian’s discounts come during the worst housing downturn in 16 years, which has slashed earnings for the Red Bank, N.J.-based company and other national home builders. Tight credit, fueled by a meltdown in the subprime mortgage industry this year, has sidelined potential buyers who were already wary following years of escalating home prices.
No other major builder is having a sale of such magnitude, but swollen inventories are likely to lead to more discounting, said Sam Chandan, chief economist at Reis Inc., a real estate research firm.
“We’ve certainly seen conditions in the housing market continue to deteriorate in the last several months,” Chandan said. “The downward adjustment in prices, whether for new homes or existing homes, is going to be far more severe than what many people thought earlier this year.”
Although forecasts predict continued declines in the number of homes whose construction is under way, the climate is seen as an opportunity by Hovnanian, which last week reported its fourth-consecutive quarterly loss.
“Folks are ready to buy, they are just waiting to confirm that there is value out there,” said Michael Skea, vice president of marketing and sales for the company’s northeast sector.
This weekend’s sales, announced Sept. 5, involves thousands of homes in 19 states and starts at 9 a.m. today and ends at 9 p.m. Sunday, said Skea, adding that the company has never had such a sale in its half-century of homebuilding.
The company promoted its “Deal of the Century” with radio and print ads, and Skea said hundreds of people have made appointments to visit homes this weekend.
“We think it will effectively overcome the malaise that people have been carrying around since the subprime debacle occurred in late February,” he said. “It’s just a matter of getting the buying public to realize this is a great time to buy.”
