Canton-based Can-Four offered $2,500 in “extras” for the first six homes sold at The Village at Wild Flower Green in Raynham when it began marketing the condo community in 2004.
Flat-screen televisions, brand-new cars and free home upgrades are some of the incentives that a growing number of housing developers nationwide are offering to attract buyers as the residential real estate market has shown signs of cooling off.
Forty percent of homebuilders reported in December that they were providing some type of non-price incentive, up from 37 percent in September and 28 percent in November, according to the National Association of Home Builders.
“The use of incentives has definitely increased, at least within the last six months,” said Steve Melman, an NAHB economist.
But while some local homebuilders say they’ve had to offer additional amenities and even reduce prices in a few cases, most say the frequency and use of such incentives hasn’t surged and they’re optimistic that spring will bring a fresh supply of house hunters.
“Everything I’ve been seeing is nothing out of the ordinary,” said Judy Jenkins, president of the Builders Association of Greater Boston.
Jenkins noted that she spotted an advertisement about three months ago for a new home in a suburban community that included a free BMW in the garage. But those types of ads and promotions are the exception, she said.
The types of incentives that are being offered by local builders – such as upgraded kitchen appliances and other kinds of add-ons – are pretty standard, according to Jenkins, who is vice president of Can-Four in Canton.
Jenkins said even in robust real estate cycles, builders have advertised various deals to distinguish themselves and to generate consumer interest, particularly for homes that may not be sited in the best location within a community.
“It’s standard practice,” she said. “Even in a great market, there’s always those properties that are little harder to sell than others.”
Can-Four, which is currently building 12 townhouses in Whitman, is offering to install a free fireplace for the first three homes that are sold. Jenkins said the company has made similar special offers during the starting stage for nearly every community it’s developed.
Back in 2004, for example, when Can-Four started selling homes at The Village at Wild Flower Green, a condo community of 95 detached homes in Raynham, the company gave $2,500 in “extras” for the first six homes that were sold, said Jenkins.
“What we haven’t seen really at all is any drop in [new-home] prices,” said Jenkins. “That doesn’t mean that builders aren’t looking at reasonable offers a little more than when [buyers] were lining up three-deep to look at a property.”
‘Always Busy’
Gil Campos, a Realtor who markets newly constructed homes in Bristol and Norfolk counties, said local builders have focused on trying to “sharpen” prices. Packages that offer an array of additional amenities and other incentives are typically provided by larger national companies, like luxury homebuilder Toll Bros. or Pulte Homes, which build communities with hundreds of homes, according to Campos.
Some of the local builders who are constructing smaller-scale developments are now throwing in a few extras, like offering to install tile and hardwood in more rooms, when in the past only the bathroom was finished with tile and one formal room was outfitted with hardwood, said Campos.
“They [builders] are offering some amenities that they may not have in the past,” said Campos, an agent with Re/Max Real Estate Center in Foxboro.
Builders are also “dressing” up spec houses, by using upgraded finishes, he said.
On the North Shore, some builders say they’ve had to adjust pricing in order to draw buyers’ attention.
Tewksbury builder Michael Wakeen said he recently reduced the asking prices at two developments under construction by 4 percent, and is providing a variety of incentives including elaborate landscaping with stone walls and exterior lighting.
“We’re very focused on giving our clients value,” said Wakeen, who along with partner Chester Sullivan owns TopNotch Homes in Tewksbury.
Wakeen’s company is developing a 187-lot subdivision on a golf course in Dracut. Fifty-two of the homes have been built and sold. The company is also building 29 single-family homes in Tewksbury.
Wakeen said his company has promoted incentives and adjusted home prices to compete with large national developers.
“Smaller builders are more reluctant and slower to adjust” to the changing market, he said.
Nationwide, the non-price incentives that builders have been offering equal to about 2.4 percent of the home price, according to NAHB. In the Northeast, the incentives are actually worth more – 2.6 percent of the selling price.
Sales of new single-family homes throughout the country reached a record 1.28 million last year, up 6.6 percent from 2004, the NAHB reported, but sales in the Northeast fell 2.4 percent. The builders’ group projects new-home sales to slip 6 percent to 7 percent this year as buyer demand slows.
“While new-home sales have been quite strong throughout 2005, we see a cooling of the market to a healthy and more sustainable pace in the months ahead, as substantiated by recent survey of our builders,” NAHB Chief Economist David Seiders said in a prepared statement.
In Massachusetts, builders are hopeful that more prospective buyers will emerge in the spring as the temperature rises.
Jenkins, of the Builders Association of Greater Boston, said she’s heard from other builders who’ve seen “a huge increase in activity.”
“There are a lot more people out there looking,” she said.
Thomas Piekarski, president of the North East Builders Association, said there are buyers searching, but there hasn’t been a tremendous amount of sales activity.
Taking the advice of a real estate broker, Piekarski, who owns Concordia Homes in Dracut, reduced the asking price of one of the homes in a 20-lot subdivision he built in Andover from $759,000 to $729,000.
“[The market] is definitely slower than last year,” he said.
Still, Piekarski anticipates a “good spring,” because he sees “a little pent-up demand.”
In western Massachusetts, builders have been active and haven’t had to cut home prices, according to Brad Campbell, executive officer of the Home Builders Association of Western Massachusetts.
“Good builders are always busy,” said Campbell.
If the new-home market in Massachusetts was experiencing a sharp downturn builders would start taking more extreme measures like paying closing costs and advertising drastic price cuts, says Jenkins.
“I don’t see that right now,” she said.
