This is the beginning of MANY new home builder incentives to come. I have been telling people New Homes are not the way to go for a while now.
On 10-17-13 I wrote:
"With inventory rising and the market setting itself up to soften in 2014, brand new homes are looking to take it on the chin again. If you are going to buy right now, BUY SMART!"
See the full article I wrote in Oct 2013 here: http://www.lvrealestatehelp.com/1/post/2013/10/you-really-want-a-brand-new-home-in-las-vegasrobert-adamswouldnt-recommend-it.html
In regards to the inventory rising, we have seen increased inventory week after week since April 2013 until December when we saw our first decline. Since December we have seemed to have hit a plateau. One week we are up and the next we are down.
There is no arguing that the volume of sales has decreased since the hay day of 2012 and even Q1 of 2013. However, those were also the days of 30% annual appreciation. NO MARKET CAN CONTINUOSLY HAVE GAINS OF 30% A YEAR AND BE STABLE. The fact is our properties were drastically under valued because of the crash. Even now that our median home price is around $185k it is still low compared to other most major cities in the US. With the low prices of 2009 to 2011 hedge funds moved in and capitalized on these low prices as they created great cashflow with CAP rates around 12-14%. This was combined with the fact that our REO inventory was cut off with laws like AB284. Hopefully, you jumped on the bandwagon and rode the wave with the hedge funds and caught some nice returns over the past few years. Now that those CAP rates are long gone most hedge funds have moved on to other parts of the country. Leaving the demand side of the market to be powered by owner occupant buyers (who were getting out bid by hedge funds) and the everyday investors.
With the demand decreasing inventory rose. However, it did not rise enough to send us into a buyer's market (yet). As of now we are in a pretty balanced market with homes selling around appraisal value. The days of selling above appraisal value and 30 offers on a property are gone. On the good deals you will still find a few offers competing but that is normal.
We have around 7,000 listing in contigent and pending status. This means people are still buying homes. The fact that inventory has hit a plateau shows that buyers are buying up properties as fast as they are hitting the market. If we maintain this equilibrium we will maintain a healthy market. The question is will we maintain this equilibrium.
My 2 cents. I hope this is helpful.