CNBC.com Buy One House, Get One Free

I would say this is a shocker, but frankly nothing in the real estate market shocks me anymore.

Apparently a developer in San Diego is offering a “Buy One, Get One Free” deal on homes, yes homes (the offer was supposed to expire 5/31 but they extended it to 6/30).

If you buy one of Michael Crews Development’s luxury homes, priced at around $1.6m, you get a 2,000 square-foot cityscape row-home worth $400,000 for free. The luxury home is in San Pasqual Valley, the row-home in Escondido. Oh, and the row homes last year were selling for around $529,000.

The sales staff at Michael Crews claims there are no hidden costs, no gimmicks, nothing. It’s just the builder’s way of dealing with the down times, which in California are way way down times. “The market is what it is,” Dawn Berry, of Michael Crews, told me this morning.

So far nobody has taken the deal, although Berry says there are more than a few handfuls of people in “serious talks” with their sales associates. In any case, “we’re just happy to see more traffic coming through,” she adds. Berry refused to call it a “desperate” move.

Now here’s my question: If the villain in this particular, historic, housing downturn is the investor-speculator, the flipper, who has essentially been driven out of the market by new lending standards and plummeting prices, then isn’t a deal like this just luring that villain back into the game and handing over the scene of the crime?

I realize there are huge carrying costs for all these new condos that the builder can’t sell, so unloading them, even for free at this point, might make fiscal sense. But the buyer/investor, who may actually live in the fancy home, then has to do something with the free property, like sell it or rent it, neither of which is easy to do these days.

In any case, the investor has to pay for the upkeep and the property taxes. Without having to worry about mortgage payments, does the investor just leave it empty for a while? And if so, what do all these free empty row-homes do to the value of the other homes around them?

Free, in today’s housing market, can be tricky business.

And a quick shout-out to Peter Viles of L.A. Land, one of my fave blogs, for catching this story.

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