Toll Brothers' low interest rate may attract few buyers
Filed under: Borrowing, Real Estate
On Thursday I wrote about Toll Brothers' new promotion: a 3.99% 30-year fixed rate mortgage. The struggling home builder hopes that it will help bring prospective buyers out of the woodwork, but I wasn't so sure it really represented such a great deal for consumers.Today The Wall Street Journal reports (subscription required) that the low rate "may fall flat" and adds that "Builders face stiff competition from bank-owned properties that are selling for big discounts. More than most builders, Toll has tried to hold its prices and instead focus on other incentives, such as upgrades and lower mortgage rates."
The problem with the Toll Brother low-rate gimmick -- and that's really all it is -- is that it's being used in lieu of lowering the prices.
Here's a rule of thumb: Any financing option that can only be used at one car dealership, home builder or electronics store is just a substitute for a lowered price: a tool that the company knows will generate more publicity than just putting stuff on sale like everyone else.
Reader Comments (Page 1 of 1)
1-25-2009 @ 8:28PM
shelly said...
Toll Brothers from what I understand is nothing more the over priced tract-housing. People I know who have built with Toll are not pleased with the overall construction. But that same low standard of quality is found in most new home (TRACT) housing these days anyway. Even the prices on newly built homes have fallen. You'll spend $700,000 for a mid range brand new home. And it will end up not being worth what the final building costs are these days, if you don't plan to stay in the home at last 5 or more years. And forget about all the free, so called upgrades. Builders inflate the prices 3 to 4 times, the actual cost on lighting, carpeting, flooring, granite counter tops, cabinets & appliances.
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