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Buy a house, get a free car: incentives rule

Updated: September 24, 2012 6:25AM



Home shoppers are finding lavish incentives to woo them amid a continuing weak housing market.

At the Sunset Ridge Estates, buy a customizable colonial for as little as $170,000 and get a brand new, $17,000 Chevy Cruze. The 2011 model. For free. KLM Builders is giving away up to 10 cars or comparable upgrades to buyers at its Antioch, Richmond and Spring Grove developments.

At the Millbrook Pointe development in quaint and pristine Wheeling, a $269,000, brick-and-stone townhouse comes with $25,000 in free upgrades, including wood-burning fireplaces, all-stainless steel kitchens and marbled bathrooms tricked out with double-bowl vanities and whirlpool soaker tubs.

Down the highway at the Patriot Place golf course villas in Bolingbrook, buyers are lavished with lawns sodded to perfection, absurdly low seller financing and a year of free insurance that will pay the mortgage if you lose your job.

The incentives are more evidence that the housing market — now in the do-or-die spring sales season — remains far from healed.

“Obviously, business has been soft,” says Kim Meier, president of KLM Homebuilders, the company offering the car promotion.

The Illinois Association of Realtors reported Wednesday sales of existing homes and condominiums in the Chicago metropolitan area dropped 15.6 percent in March from a year earlier, when tax credits revved up sales. It was the ninth straight month of year-over-year declines.

The median price fell 14.1 percent to $158,000 as foreclosures continued to weigh on the market.

Nationally, existing home sales dropped 6.3 percent to a seasonally adjusted annual rate of 5.1 million, the National Association of Realtors reported. The pace is far below the 6 million homes a year that economists say represents a healthy market. The median price fell 5.9 percent to $159,600.

New home construction dropped 13.3 percent last month from March 2010, the Commerce Department reported earlier this week.

“Housing starts remain at an extraordinarily depressed level,” said Dan Greenhaus, chief economic strategist at Miller Tabak Co. “To put this in further perspective, a doubling of (new homes) from here would still put starts at the lowest level of any other recession.”

Across the country, real estate agents are reporting a rise in traffic at open houses. But they say buyers are reluctant because of the shell-shock they suffered after the free-money machine blew up in everyone’s face. The foreclosure epidemic, the plague of employment insecurity, the fear that the U.S. is on a downward slide—they’re all playing into buyer commitment phobia, brokers say.

Worse news for sellers is that buyers don’t think the housing market has hit bottom, according to Truila.com. A recent survey by Trulia and Harris Interactive found that nearly 70 percent of renters who aspire to being homeowners say they will wait at least two years before buying. And nearly 60 percent say a housing recovery won’t come until after 2012.

“Many are reluctant to purchase a home even if they have the means because of the uncertainties in the economy,” says Celia Chen, a housing market analyst at Moody’s Analytics.

It’s clear that many sellers are panicked. A quarter of sellers who listed their properties on Truila.com on March 1 have already slashed their prices at least once.

Last summer, Bobby Barweki started looking for a foreclosure to buy. Barweki, 30, scraped together a 20 percent down payment by living with his parents after graduating from college in 2007. The foreclosures he looked at were all “trashed,” he says.

Then one day his dad sent him an email about the free-car deal at Sunset Ridge Estates.

Barweki, a store manager at Chicago recreation goods chain Novotny Sales, recently closed on a $178,900 ranch home. He has a 4.875 percent interest rate on a 30-year-loan. Instead of getting the new car, he opted for $17,000 worth of free upgrades, including a stone facade and hardwood floors. Barweki doesn’t have much faith in an economy where the definition of a recovery seems to be that things don’t get worse. He says all the new jobs are low-paying. And he doesn’t think the housing market has hit bottom. But for him, it was the right time.

“Interest rates are low, I had the money, and I got a great deal,” Barweki said.

Contributing: AP with Francine Knowles



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