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Home Buying On Layaway

Mike Austin

By Aili McConnon

Home Buying On Layaway

As builders lobby Congress for a $250 billion stimulus package, some in their ranks are trying to lure buyers using a tactic long associated with retail: layaway. K. Hovnanian Homes and Beazer Homes are offering contracts that let purchasers deposit downpayment installments in a nointerest escrow account. (Buyers who back out of such plans will lose whatever they’ve accumulated.) Hovnanian, whose “Passbook to the American Dream” starts in December, will also offer sweeteners— free flooring upgrades, for instance. Beazer, whose layaways began in September, has 16 buyers in Indiana. (It won’t disclose national figures.) Why wouldn’t potential buyers instead save on their own and wait for home prices to drop further? Dan Klinger, head of Hovnanian’s mortgage unit, bets buyers will want to watch their account grow “as they see the roof go on.” The best part of buying a new house, he says, “is watching it take shape.”