Yesterday's article on Bend builders building 'cheaper' versions of the same model of houses, explictly explained to look exactly the same on the outside, was alarming. So, you may have bought a house a year or two ago that was 50,000.00 more expensive than an IDENTICAL looking house being built today in your subdivision.

First of all, I'd be pissed that I was never given that option. It sounds as though the builders were forcing these upgraded houses down the consumer's throats, without revealing that some of the cost was granite countertops and i-pods stations. Why? Because as the article said, they could get the money. (Forcing may be the wrong word; when you buy something, " buyer beware....." should always be in play))

Now that they can't get the money, it suddenly turns out that these upgrades aren't really all that important and essential afterall.

Yuck.

It is very revealing that they are keeping the outside of the house exactly the same. As a retailer, I can tell you, that product that looks exactly the same on the outside, which is cheaper because of small changes on the inside, almost ALWAYS sell better. So if I'm the guy who bought the house with all the bells and whistles, and I'm trying to compete with a newer house that looks the same but is considerably cheaper, I've got a problem. But wait, you'll exclaim, I have granite countertops!

Walmart business model is partly built on this illusion. You think you're buying the same thing, but you're actually buying a product that the producer has found some way of making cheaper. I have a pack of baseball cards for 2.50, that looks exactly the same as a pack that Walmart sells for 2.00, except that their pack (in the fine print) has a few less cards. It gets kind of ludicrous, and I never fail to take satisfaction in proving to the customer that they actually spent MORE per card than if they had bought from me, the dreaded expensive downtown specialty store. As our Mama's always taught us, and which we conveniently forget everytime we go shopping, You Get What You Pay For; There Is No Free Lunch; You Don't Get Something For Nothing.

Often it doesn't even matter. I suspect that every parent who buys one of those baseball card boxes at Walmart that are mostly styrafoam inside, but which have a very low price-point, know exactly what they are buying. It is the APPEARANCE that matters -- "Look, Junior, I bought you a full box of cards for only 10.00!"

If appearances didn't matter, houses on the West side of Bend wouldn't cost one third to one half more than an identical house on the East side. Personally, I think the neighborhood I live (Williamson Park) is much nicer than a neighborhood I'm familiar with on the West side; an owner of a house there, turned down an offer for a house, that if he had accepted would have bought him a house AT LEAST as nice in the Williamson Park neighborhood, and he STILL would have a few hundred thousand left over. Why, because it was the West side vs. the East side. I just find that strange. (Just as I find it strange that people will pay so much more for simple branding.)

Two other alarming things about that article: that they are going to try to squeeze even more house for the size of the lot, and that they are going to build just as many houses as last year. I wonder if that isn't all just for the media, and whether they aren't already hedging their bets.

Lowering prices is a true sign of a downward moving market, in my experience.