New Home Gouging?
 

A friend of mine closed on his home just six months ago in TV. He "swears" that prices on an exact Designer home like his has gone up in price 30% in the last six months. He says, "The Developer is gouging people".

$250,000 Designer home with a 30% increase would now cost $325,000. My friend is convinced this is true and I have no reason not to believe him as He is not one to make "things" up. I have no valid data to back him up.

Assuming this is correct, is the Developer gouging people on new homes? :shrug:

Not true. Homes have gone up around 10% over the past year. Varies a bit by model, but only a % or so. However lets assume market demand caused the 30% increase. Real Estate has always been market driven so not sure why any % increase would be gouging?

Ask your friend to sell you his home at 80% of market value and see how quick he changes his thinking. He will sell it at the market no more, no less, and if you accuse him of gouging, do you think he will agree?

Supply and demand ,Hope the real estate taxes don't follow

Here's another thing. Property prices have increased which is a big part of the price jump. The basic house alone has seen about a 10% increase. They're also selling like hot cakes. I was out yesterday in the new section off Hillsbourough and the contract were working like crazy to keep up with the load.

Are not the new home prices only quoted on specific lots? All lots are not equally valued, thus an identical structure could have a different price.

True, you have to assume lots have gone up too. I know his is an interior lot---I believe an extra 10 foot in the back because of a birdcage addition.

Regarding "He says, "The Developer is gouging people".......

The developer is probably blamed for the sun setting earlier this time of year, too.

The fact is, no home buyer buys a new home here and writes a check for it with a gun to their head. Any day of the week, a buyer can buy a slightly used almost-new home from an owner or MLS real estate broker/agency, and they'll have a "new" home that has all the enhancements already done and they'll be in a neighborhood that is established and close to one of the town squares.

If new home buyers are paying "too much" and "getting gouged", it's their own fault......or maybe, knowing how prices are a lot higher on either coast, these new home prices seem like a bargain compared to what they're used to seeing in NY or CA, MA, etc. Often, a $300,000 designer home here would cost two or three times that amount in another state, and it would be stick-built and not concrete..

all I know is that I could have bought a new 2-2 courtyard villa (least expensive model) in May for $165000. Now same type model, same type lot, is $183000.

We have been here just short of 10 years. When we bought our lot, we had to pay an extra $1000 to get a lot facing west so that our lanai would be on the east. The week after we put down on our lot, the prices went up $8000.

Just as someone else noted, it is market driven and also depends on supply and demand. Houses here cost much more for basically the same house than in Amarillo. Lots of things factor into home prices.

Price gouging refers to suddenly raising prices ridiculously high (i.e. water, gas, etc.) when a disaster such as a hurricane, earthquake, flooding, tornado, etc. occurs. Water and gas for instance are considered necessities rather than choices to have or not have.

You should have bought it in May ! !

I wonder, too, if lumber prices here are much of a factor in pricing. Since our homes are largely block, with some metal studs mixed in throughout the house, maybe the inflation in lumber is discounted a bit. I remember last fall that lumber took a 40% jump.

So true. Every square inch of the lot increases value. A lot that is only a few feet wider or deeper can cost considerably more.

I am glad my friend bought his patio villa when he did. The prices on new AND used really went up in recent months because everyone wanted them.


Poor developer. Everyone picks on him.

does anyone really believe that the developer has any NEED to gouge any buyer?

Why are people so critical of the Developer? :ohdear: Real Estate has always been market driven and price increases are not gouging! Every builder in America sells inventory at market price, which is what purchasers are willing to pay.

Gouging implies taking unfair advantage of someone. There are many other retirement communities around that offer lower prices! There is no gun to anyone's head.

Excellent answer!

I hope they keep going up. My kids will love it !!!!!

People will pay a lot to get away from weather like a blizzard in May:

Photos: May winter storm dumps record snow on SE Minn. | Minnesota in Photos | Minnesota Public Radio News

Again...excellent answer. I'm only here a short time and I hear a lot about "The Morses" and their empire. I say God Bless them, and I wish I had this fabulous idea and the wherewithal to bring it to fruition. All of my expenses here are less than where I was, and I didn't have ANY of these amenities at my disposal.

A really poor choice of words. Gouging occurs when someone sells a vital commodity at exorbitant prices, usually after a disaster. For instance, someone selling bottled water at $20 a bottle after a hurricane. No one forces anyone to buy a home here. In the real estate market, supply and demand are the factors that matter most. The developer would be a fool to sell his homes for less money than they are worth on the open market.

Why are people so critical of FLIPPERS? :ohdear: Real Estate has always been market driven and price increases are not gouging! Every flipper in America sells inventory at market price, which is what purchasers are willing to pay.

Gouging implies taking unfair advantage of someone. There are many other retirement communities around that offer lower prices! There is no gun to anyone's head.[/quote]

I used Barefoot's posting with a little editing to make a point. :laugh:

This is totally correct. But I meet many people here in TV who have never worked in a private-sector or small business, to actually see income versus expenses.

Uninformed Buyer
 

I used Barefoot's posting with a little editing to make a point. :laugh:[/QUOTE]

True an uninformed purchaser will buy at a Flipper's price but not most of us here on TOTV who will do their due diligence. :beer3:

getting ready to buy
 

Gouging is when a hurricane hits and stores raise the price of water to $15.00 per gallon. We need water and have to pay the price. Free enterprise allows anyone to raise the price to whatever someone is willing to pay. As long as people continue to scoop up property at the rate they are in The Villages, the developer has the right to ask what he charges. Do I like it as a person getting ready to buy? Of course not, but it is his right. It is also my right to not buy. But, it's also an investment that can only appreciate in value as the boomers continue to age and we will be making that business decision.

I'm no fan of the developer. I admire the business acumen that created this bubble. I don't admire some of his business practices. However, this arena is not one where he is being unfair or gouging. Real estate is market driven. If people thought these prices were too high, they wouldn't buy and the Morses would lower their prices accordingly. Plain and simple.

gee I always thought increasing property values were a positive thing.

Is the developer responsible for the increased price of bread? Gasoline?

Supply and demand......does not = gouging.

What is it called when the prices are lower than one expects......surprise!!!!!

btk

I think you should go back to your friend and share what the posters have said. He needs to remove the "gouging" from his story. What do you think??

Woo Hoo !! Love all of these posts. It means the value of my house has gone up & I love it ! :pepper2:
Not that it matters because I would never move out of the Villages & I love the house I'm in ! :laugh:

If the developer were now selling homes at 30% less than your friend paid for his what would he call him.

In 2006 many people purchased in The Villages then in 2008 the prices went into a nose dive. Some of those people are just now getting their home values back to what they paid in 2006. I think I have my years correct if not I am sure someone will let us know the correct dates. I purchased in May of 2005 and the prices went up like mad for a couple of years after 2005.

The developer has a better grasp on the rate of sale than perhaps any developer in the country. As he raises prices from month to month he watches the rate of sale if there is no slow down he will raise them again until he notices a slow down then he will adjust accordingly.

I used to go to sporting events and purchase tickets from scalpers. I did this for at least 40 years. In the 70's I would purchase great seats for twice the face value that would be a $15.00 ticket for $30.00. I often wondered how long it would take the team owners or University to figure out they were selling an item (ticket) for $15.00 and some one else is selling it for twice the face value. Well they have figured it out because I wouldn't think of pay what they are selling them for now.

I had Indianapolis Colts tickets 14 rows off the field when they first came to Indy. I gave them up when I purchased in The Villages the same seats were $150.00 each. The Colts figured it out and still fill the place.

In 1980 I purchased NCAA final four tickets 3 rows off the floor for $100.00 and was told by friends that I was crazy. I told them I wish I could sign a contract for those same seats at $100.00 for the rest of my life. Those same final four seats now would go on the street for around $4,000.00

I know what does sport tickets and homes have in common? I just got carried away.

It is human nature to take advantage. We all must be vigilant and protect ourselves from anyone and everyone that wears the title of SALES.

My former home has also gone up quite a bit since we sold. So for our situation it is still an even keel.

If the developer or the seller of anything for that matter, with a few exceptions, is gouging people, then people will stop buying from that seller.
The simple little law of supply and demand explains so much.

We should all be happy about the increases...means our values are climbing

I left the Minneapolis area in August of 2011 but have been back a few times. I was there last April 16th - 22nd, I went to NYC for 4 of those days but there was quite a snow storm on the 18th the day before we left for NY (also the day we closed on our house in The Villages) and then another one on the 23rd when we got back. I left MN to move to MI but now I can't wait until December so I can get out of here and enjoy the warm weather and lovely people of The Villages for the winter.

When I was looking to buy in May, a new patio villa was 142K not including the 12K bond and having to furnish it.

Last week, I saw a new patio villa for 179K.

The market have started to rise dramatically on new homes in the span of the last few months. Pre-owned have risen about 10%. If one procastrinates, it will cost even more. IMHO

No precedent
 

2BNTV---(142K to 179K) Thats about 26% increase in six month all things being equal. That is a significant increase in a fairly short period of time. Yes, I agree good for current owners and not so good for those planning to buy in the near future.

We are in the so called "Final Phase" for new homes. The Developer of TV is certainly using this as a marketing tool and is raising prices accordingly. Will supply any time soon out distance demand?

The interesting question is will these higher prices be sustained following build-out. I doubt you can find a precedent for what is currently happening here in TV.

Spot on, OBXNana.

Here is part of Wikipedia's definition:

Price gouging is a pejorative term referring to a situation in which a seller prices goods or commodities at a level much higher than is considered reasonable or fair. This rapid increase in prices occurs after a demand or supply shock: examples include price increases after hurricanes or other natural disasters. In precise, legal usage, it is the name of a crime that applies in some of the United States during civil emergencies. In less precise usage, it can refer either to prices obtained by practices inconsistent with a competitive free market, or to windfall profits.

You now have four pages of reasoned and rational replies which can be summarized as NO, the Developer is not gouging people on new homes.

When we were looking here in Dec 2012, we briefly considered a patio villa, the cheapest ones were about $145,000. IIRC Today, 10/28/2013, this is the cheapest patio Villa:
VNH# 959014
Colony - 2 BED 2 BATH
3*** CARRABELLE CT
Village of Collier
Price: $148,734

With that said, as others have pointed out, it is very hard to compare anything other than a villa, as lots and included features are so varied on all the other home series. With Patio Villas, it is easier to comapre "then and now", as there are somewhat less differences in lots. In Cottages and Designers, lot size, corner, or inside lot, home orientation N W S E etc), how it lines up with the back yard neighbor, cabinet choices, exterior elevation, etc, etc, etc. That doesn't mean that the prices are not going up. Its possible that the developer keeps at least one low priced Patio villa for advertising purposes.

Home prices are rebounding in many desirable locations. According to Trulia, from 7/13/13 to 10/13/13 home sales prices increased 14.6% in Newport Beach, CA. Over the last year sales prices increased there 26.8%. Since I currently own a Newport Beach home this makes me quite happy. Yay! Yippee!

The Villages is also a desirable location. Moreover, its target purchaser demographic comprises many baby boomer retirees. Since they are so numerous and relatively affluent, their numbers as well as their desire to relocate to a gentler climate and "free" golf all drive the price of homes here. To further compound and support price appreciation The Villages is additionally desirable for its many amenities, relative personal safety and so on.