Builder’s guarantee: Prices will not fall 10%. Guaranteed.

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Intriguing item from Manhattan Beach Confidential this weekend: The blog reports a local builder took out a newspaper ad in which he guaranteed -- yes, guaranteed -- that prices of new homes in the Manhattan Beach area will not fall 10% this year. Under the headlines ‘The Crystal Ball Story’ and ‘Advice for New Home Buyers,’ the ad reads:

‘I’ve been in the real estate development and sales business in the South Bay for more than thirty years and you can rest assured that prices on new homes will not and can not come down another 10% this year.’

The advertisement, which ran in The Beach Reporter on Jan. 10, argues that land prices in Manhattan Beach will remain high, and building costs will remain relatively fixed, so it’s not possible for prices to drop much from current levels.

There is a flaw in that logic, and MB Confidential finds it: ‘Builders can lose money instead of breaking even.’

Note: The MB Confidential post does not name the builder who placed the ad.
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Hat tip: MB Confidential