Forget the flat-screens, builders are slashing prices

Remember back in the day, when builders were refusing to lower prices and were instead offering "incentives"? The flat-screen TVs, the granite counter upgrades? Those days are over, Peter Hong reports in the L.A. Times, and builders in the Inland Empire are resorting to old-fashioned price cuts:

"Stuck with excess inventory, builders throughout California are beginning to offer steep discounts on new homes, sometimes at a loss. Centex Corp. is touting the 'greatest prices in years' in its ads. In San Bernardino County, builder Van Daele Homes is advertising 35% discounts.Until recently, most builders resisted outright price cuts in California so as not to undermine the value of their holdings. Instead, many offered incentives such as big-screen televisions or interior upgrades."

"'Builders don't have the luxury of waiting another year for the market to turn -- they need the cash flow now,' said Patrick S. Duffy, principal of Metrointelligence Real Estate Advisors, a consultant to home builders. 'It's better for them to take 90 cents on the dollar today than to risk no cash flow at all because they're not selling any houses,' he added."

The price cuts on new homes are squeezing sellers of existing homes: "Jack Lloyd, 51, has been trying to sell his Palmdale house for nearly a year. He's cut the asking price several times, and he's now seeking $285,000 -- down from $425,000 originally. But Lloyd isn't hopeful, noting that new houses in nearby developments are $240,000.

'Who's going to buy mine?' he asked.

Good question, Jack.