[Villages Kahuna]

The fact that The Villages is nearing build-out has not escaped the attention of buyers, of both new and pre-owned homes. The state of the financial markets and interest rates is supportive of a buying decision by people who have decided they want go live here and don't want to be "left out". There's a reason why 300-400 new homes are being built and sold each month.

The prices on pre-owned homes have escalated as well. Zillow's estimate of the value of my own home has increased by almost 20% in the last year alone! I'm sure that's an underestimate as Zillow has no way of incorporating the value of premium lots into their estimates. Friends of ours recently sold their well-located and completely professionally furnished courtyard villa in only one day for $48,000 more than their asking price. Three bidders had an intense bidding war until there finally was a winning buyer.

How much of that sales premium was an initial underpricing and his much was buyer exuberance? All I can say is that the initial asking price was well supported by recent comps. Our friends were quite satisfied with the agreed upon asking price and their neighbors thought it was grossly overpriced.

Frankly, I doubt that the developer has increased their target profit margins. They've remained at about 27% for a long time. I do believe that the cost of land and construction materials and labor has increased however. Take a look at the bonds on newer houses compared to those built several years ago. The bond is straight ad valorem split of the cost of utility construction and reflects only the cost of installing utilities, no profit included. We have a Lantana and the bonds on new Lantanas being built in the new southern end of The Villages are more than double our bond on our seven-year old home.

While the developer might have pulled back on any sales discounts or spiffs as now being unnecessary to sell houses, I doubt very much that they are purposely gouging new buyers.