Saw a billboard today at a major intersection and got a flyer in the mail today. It proudly proclaimed “Buy a Condo and Get a Car Free”.
Whats wrong with this picture? Maybe the builders are just generous enough to be giving away free cars to new home buyers. I think not!
These condos were already extremely highly upgraded – granite counter tops, stainless steel appliances, 3-tone paint, expensive carpeting, washer-dryer. However this wasn’t enough to overcome the recent slowdown in the San Diego housing market. So some communities started offering plasma TVs as part of their already luxury-level “standard” package. The problem is once one community does it, everybody copies them and the product no longer has any differentiation. So these smart sellers decided to throw in a free car. I can see that making a lot of fresh-out-of-college kids real happy.[and broke in a few years.]
Of course, people don’t realize that the condos that sold for $350,000 last year, which sold for about $340,000 this summer after all the phenomenal upgrades thrown in free, now cost $335,000 with an additional $15,000 free car added into the mix. If that isn’t a significant price drop, I don’t what is. But of course agents will look at comps and say its just a minor seasonal price decrease.
Well good luck to all the investors who think San Diego is still a good place to invest. If you’re one of them, let me know. I have a friend who wants to sell his multiplex. He’s selling it at a very generous-for-san-deigo 6.5% CAP rate.