KB Home, one of the largest homebuilders in the country, just said its biggest competitor isn't another builder. It's homes like yours.
On its latest earnings call, KB Home's leadership said resale inventory has climbed to its highest level in a decade, and that prices are "starting to decline in more of our markets."
Builders are fighting back with incentives. PulteGroup, another major builder, now spends an average of 10.4% of the sale price on incentives. On a $500,000 home, that's about $52,000 in rate buydowns, closing costs, and price cuts. In 2022, it was about $11,000.
My take: Utah is seeing the same thing. At the end of October, the Salt Lake metro had 4,030 homes for sale, the most we’ve seen in October within the last decade. That's up 17.7% from a year ago, while inventory nationally is up less than 6%. What’s interesting is that while Inventory has been climbing in Provo-Orem metro area as well, it hasn’t been nearly as dramatic as Salt Lake, with inventory basically flat year over year, while still certainly being elevated relative to the rest of the previous decade. All of this just means more options for buyers, and better deals to be found.
Rates are helping buyers too. They've dropped from 7.61% in early October to 7.17% this week, the lowest in about six weeks. On a $500K loan, that's about $150 less per month.
If you're buying: Don't skip new construction. Compare builder incentives side by side with resale homes, then use those numbers to negotiate with resale sellers.
If you're selling: Home prices in Utah Valley are still up 48% since 2020, so most homeowners have plenty of equity to work with. You don't need to match a builder's $52,000 incentive, but you do need to give buyers a reason to choose your home over new construction. Smart pricing and a rate buy-down go a long way. If your home didn't sell this year, this is usually why.
Here to serve,
P.S. Quick question: are you buying, selling, or just watching? Hit reply with one word, and I'll send you what matters for your situation.
