Tuesday, May 10, 2011

NEW CAR SALES PUTTING THE HURT ON NEW HOME SALES

American car sales are at the highest point they've been in the past 4 years.  Every day our TVs and Internet sites are bombarded with car ads touting low lease prices, high gas mileage and great standard features.  Banks are fighting over giving loans to people that buy or lease new cars.  And the government loves it because the consumer is helping buy an important American product...cars.

So who can blame the American consumer for trying to get the best deals?  Taking a second look at the housing market finds that resale homes are down but there is a glut of homes to choose from at ever lowering prices.  In my neighborhood alone, 3 more homes just put up For Sale signs bringing the total in my 6 block morning walk routine to 19!  9 of them have been foreclosures and on April 30th, my next door neighbors moved out after they lost their $480,000 home to the bank.

Auto makers wouldn't be offering such ridiculously low lease and purchase payments if the banks weren't eager to loan people money for something that has a high turnover rate, brings in obscene interest and payments that are only about 20% of their house payment.

If you are a new home builder or even a remodeler and have been working with a prospect to get a contract signed and they pull up to your office in a new car, you've probably lost the job.  People tend to forget that a car payment, especially a lease payment, can put them out of the market when it's time to get that bank loan for your new home.
I'm bummed!

Caution your prospects to wait until you've completed the house before they buy a new car.  Just a word of warning as it happened to me twice years ago when my customers' home loans were turned down because they bought a new car.

1 comment:

Heywood said...

Coach,
I believe that if our industry continues to conduct business as usual, we will never recover.
We need to be aggressive. Time for our leaders to lead or get out of the way!