- The Washington Times - Sunday, November 20, 2005

Home builders are making a greater effort to attract buyers, offering incentives such as reduced closing costs, finished basements and plasma televisions as they try to maintain the brisk sales of the past five years.

“Our salespeople are finding that people are taking more time to make a decision and shopping around longer,” said Linda Kandel, spokeswoman for Somerset Homes, based in Bel Alton, Md., in Charles County.

However, business remains good, she said.

Somerset Homes is trying to attract customers to the Estates of Idlewild, a community of 38 single-family homes near Fredericksburg, Va., which opens next month.

“This incentive was for a free finished basement or $95,000 in design-center options,” Ms. Kandel said.

Home buyers in the region also are benefiting from stiff competition among builders that rushed into the market while the housing bubble peaked.

“Increased competition amid sellers throughout the Washington metro area caused by increases in inventory is offering buyers new opportunities to be more selective in the house-hunting process,” said Maureen McEnearney Dunn, general manager of Alexandria-based McEnearney Associates Realtors.

In a quarterly report released last week, the Federal Reserve said mortgage lenders “reported weaker demand for mortgages to purchase homes as well as weaker demand for consumer loans over the past three months.”

Mortgage rates have risen steadily for more than two months and are likely to continue climbing in the next year, mortgage giant Freddie Mac said last week.

Average interest on 30-year fixed-rate mortgages rose for the 10th straight week this week to their highest since September 2003, Freddie Mac reported.

Fixed-rate, 30-year mortgages averaged 6.37 percent on Nov. 17, up from 6.36 percent a week earlier and 5.74 percent one year ago.

For home buyers, the downturn in the housing market means they have more bargaining power when they speak with real estate agents and can expect more incentives.

The National Association of Home Builders said a survey it conducted in September of 488 home builders showed 58 percent were offering incentives unrelated to the price, compared with 51 percent six months earlier.

“Depending upon the community, we might be offering a reduced-rate mortgage for six months, a landscaping or decorating package, or even a free plasma TV,” said Jim Zeumer, vice president of investor relations for Pulte Homes, one of the nation’s largest home builders.

Developers say the D.C. area is not affected as deeply by the slowdown in the housing market because of its strong economy.

The D.C. area ranks near the top of lists of the nation’s home-buying markets.

The local economy created 77,100 jobs last year and is on course for similar growth this year.

“The first part of the year was pretty aggressive,” said Cynthia Herberg, marketing director of Bethesda-based Winchester Homes. “Now we’re just seeing the normal holiday traffic downturn, but we’re right on plan.”

She said the company adjusts pricing and incentives for each community individually, rather than offering standard incentives for all its homes.

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