Why Builder Incentives Might Leave You Upside-Down in Today’s Market

Why Builder Incentives Might Leave You Upside-Down in Today’s Market

By John Baptiste, Managing Partner – Local Realty Agency Mid-Cities (Hurst, Euless, Bedford)

In today’s shifting housing market, headlines promising builder incentives—especially mortgage rate buydowns—can seem like a lifeline to buyers dealing with high interest rates. But behind the curtain, many of these offers may be setting homebuyers up for serious financial risk.

This isn’t just speculation. According to KB Home COO Rob McGibney, some buyers lured in by incentives from competing builders are now paying artificially inflated home prices. That means they’re overpaying today—and potentially locking themselves into negative equity tomorrow. In McGibney’s own words: “They may potentially be upside down when they try to sell that home.”

What's Really Happening With Builder Incentives?

Let’s break it down. Some builders—particularly large national ones—offer aggressive rate buydowns and cash at closing rather than cutting base prices. This protects their “comps” (comparable home values in the same community), which helps maintain price appearances. But the reality for the buyer is very different.

Imagine this scenario, which we’ve seen right here in the HEB area:

• A new home is listed at $450,000, with a 4.99% rate buydown and $10,000 in closing costs.

• Nearby resales of comparable homes are closing at $410,000 to $420,000.

• That incentive-driven buyer thinks they’ve scored—but if they need to sell in a year, they’ll be competing with homes at far lower prices.

This is how buyers become “upside-down”—owing more on the home than it’s currently worth. And it’s happening across North Texas.

The HEB Area: A Local Snapshot

The Mid-Cities—Hurst, Euless, and Bedford—have been historically strong for stable, middle-income buyers looking for long-term value. But even in this resilient submarket, we’re seeing rising resale inventory in pockets, especially in new construction-heavy zones. And with nearby markets like Fort Worth and Arlington experiencing price pressure, inflated new home sales here won’t hold forever.

We work with buyers every day who are navigating tough decisions. And while incentives can soften the monthly mortgage payment, they often don’t improve the long-term equity picture.

What Should Buyers Do Instead?

1. Focus on base price, not incentives. A lower price gives you more equity and better resale protection than a temporary interest rate gimmick.

2. Compare apples to apples. Look at recent resale comps in the same school district and neighborhood—not just builder marketing.

3. Run the long-term numbers. If you plan to move in the next 3-5 years, resale value should matter more than today's mortgage savings.

4. Ask your Realtor the hard questions. Is this home priced above the neighborhood average? Will this builder reduce prices next phase, undercutting your investment?

Builders Need to Lead With Transparency

What KB Home is doing—cutting base prices rather than hiding behind incentives—is a model more builders should follow. Buyers deserve transparency and pricing that reflects real market conditions.

If you’re buying in the Mid-Cities right now, particularly in the Hurst, Euless, Bedford area, you need to think two steps ahead. Because the real estate market in 2025 isn’t about chasing “deals”—it’s about protecting your equity.

And for those selling soon or buying new construction while trying to offload another property? Be especially careful. The resale market is your real competitor.

Want to talk about your specific neighborhood or current market value?
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