Home Builders attract buyers with promotions
Nobody can deny that the housing
market is slowing down. Sales of homes are down, when
there is a surplus of them on the market already.
Since sales are slow, home builders are becoming a bit
more creative in their selling tactics in order to lure
new buyers into their places. Many are offering special
incentives and price reductions and are including “pet”
tie-ins to get potential buyers into the showrooms.
An article in The San Diego Union Tribune, “Battling
the home-buying slowdown,” by Roger M. Showley on
July 30, 2006, discusses the special promotions and discounts
that homebuilders are promoting across San Diego County.
“One builder is offering no
mortgage,
tax and
insurance
payments – albeit for six months not the life
of the loan. Perhaps the most innovative come-on has been
Con-Am Group and Colrich Communities’ ‘Yorkies
& Friends Spa Day,’ held last week at the developer’s
58-unit condo project, the Lodge at Bankers Hill, just
north of downtown.”
“Potential buyers – and anybody for that matter
– could bring their pooch in for a grooming, photo,
free doggie toys and treats and more, with no obligation
to buy. Except the builder hoped the pet fanciers would
take long enough to tour the models and perhaps think
about living at the development.”
Builders are trying to attract first-time buyers with
pet promotions because it is very difficult for renters
to find pet-friendly places.
This is a big incentive to people who have dogs or others
mall animals that they take with them everywhere.
“Marketing consultant Gayle Falkenthal said the
dog tie-in wasn’t an effort just to grab media attention,
but was aimed at empty-nester renters. ‘Dogs are
their kids,’ she said. ‘As renters, they sometimes
find it difficult when they own a dog. That’s a
very powerful motivator to buy. So why not attract buyers
with a view to an amenity like that?’”
Promotions like this seem, to be attracting a lot of “potential”
buyers to these events, but the true question is, ‘Are
people really buying these homes?’ Or ‘Are
they just coming for the freebies.
This issue is up for debate, since many of these promotions
are a fairly new tactic that homebuilders have employed.
But, for the most part, builders’ business is slow,
as fewer homes are being started this year.
“The first half of the year saw only 5,742
newly
built homes and condo conversions enter escrow, down
37.7 percent from 8,790 sales in the same period last
year. The count was the lowest since 5,805 sales in the
first half of 2001, when the local real estate market
was entering its white-hot period of skyrocketing sales
and prices.”
“One key indicator of market weakness is the cancellation
rate at housing tracts. Market watcher Sharon Hanley at
HDS Associates in Oceanside said the percentage of home-sale
cancellations has run as high as nearly 40 percent certain
weeks this year, compared to a
normal
rate of about 20 percent. But she said the rate has
come down in recent weeks and remains relatively low for
newly built single family houses.”
Only time will tell if incentives and promotions are enough
to pull the market from its slump.