What is the magic mix that will get buyers motivated. Mortgage rates lower than today’s 5%? smaller down payments? Below market value pricing? Special amenity packages? Or a big tax credit? Strategies to bring buyers back into the market dominated the recent Annual convention of National Association of Home Builders in Las Vegas.
Survey results suggest that a tax credit alone is not sufficient to motivate buyers to sign purchase contracts.. The most effective in convincing them to buy now is: a 30 year loan with a fixed 3% interest rate. The Zero down option would be highly attractive to potential buyers Guarantees by builders that loan applications will be accepted when buyers verify their income and have a fair credit score. Price concessions also are compelling to would-be buyers. Most effective of all: a 10% discount below TRUE market value—in other words, instant equity for the purchase upfront.
Bottom line: Look for builders to offer combination packages of special financing, price concessions, lower down payments and perhaps loan application approval guarantees. Tax credits would continue to get more push on Capitol Hill but financing concessions appear to have more clout with potential home buyers.
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