Buy one house, get one free

IN CALIFORNIA

Buy one house, get one free

The US housing slump is driving some developers to take desperate measures

CAN you imagine a developer giving you this sales pitch: Buy a 4,000 sq ft bungalow in Katong and I'll throw in a 2000 sq ft terrace house for free.

16 August 2008

CAN you imagine a developer giving you this sales pitch: Buy a 4,000 sq ft bungalow in Katong and I'll throw in a 2000 sq ft terrace house for free.

In the US, where the housing market has taken a nose dive, one San Diego developer is doing just that.

If you buy one upmarket Royal View Estate home in San Pasqual Valley area starting at US$1.6 million ($2.3 million), you'll get another less luxurious home in Escondido area worth worth US$400,000 for free.

'We thought, 'Why does it just have to be on Pop Tarts and restaurants? Why not buy one home, get one free,' Ms Dawn Berry of Michael Crews Development told radio station 10 News in San Diego.

'You know it's a straight-up legit deal; no prices have been increased, there are no hidden costs. Michael is just giving away a free home for people that buy at Royal View,' said Ms Berry.

Mr Michael Crews, owner and president of the residential building company, told the radio that the target was the niche market.

'We are targeting a niche market of investors who are interested in the opportunity to buy a new home for themselves and get a free rental property or second home for family members,' he said

Mr Adam Rossman of Michael Crews Development said they have getting good response.

'People have been coming in saying, 'How can you do this?' Well, it's our way of dealing with current market conditions to move some inventory,' he said.

The houses are not dumps.

Located in Escondido's San Pasqual Valley (approximately 56km north of San Diego), the Royal View neighbourhood offers estate homes in a gated neighbourhood.

These upscale, luxury homes range from 3,487 to 4,164 sq ft with 4 bedrooms, 4 baths and up to 6-car garages. Each home is on a minimum of 2-acres and feature swimming pools and RV garages.

The terrace house that comes for free includes 3-4 bedrooms , 2 bathrooms and a two-car garage.

'We're aware that this promotion isn't for everyone,' Mr Crews said.

'Our intent is to get people talking, instigate some action.'

But things may be taking a turn for the better for developers.

US home sales contracts signed in June unexpectedly rose, boosting an index of pending sales to the highest level since October, though it was well below the year-ago level, a real estate trade group told Reuters yesterday.

Some analysts said the main reason for the June improvement might be that banks were aggressively marking down prices on foreclosed properties to get them off their books. But even that is a sign that housing markets are being brought into order.

'There are some bottom feeders coming in to buy some of these homes in distressed situations,' said Mr Andrew Richman, managing director for SunTrust's personal asset management division in West Palm Beach, Florida.

The pick-up in June signing sharply contrasted with forecasts by economists polled by Reuters, who had expected contract signing to decline 1per cent.

Mr Pierre Ells, senior global economist for Decision Economics in New York, noted that there were still huge inventories of unsold homes on the market, so the pending sales data had to be treated with some caution.

'This is telling us that sales have stabilised,' Mr Ells said. 'This raises some hope that we've flattened out, which doesn't mean the problem is solved.'

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