Area home builders have no need to offer incentives

Not wanting to lower their prices, home builders across the nation are offering creative incentives to make a sale.

A survey by the National Association of Home Builders found 62 percent of 406 builders are offering buyers incentives such as televisions or free heat for six months. Thirty-three percent are paying closing costs or fees. Twenty-five percent of builders say they are cutting prices, a move area builders try to avoid because it angers previous buyers.

But local real estate agent Kerry Johnson, who is associated with RE/MAX Achievers and Mossy Oak Properties, said area home builders don't need to offer incentives to sell houses. He said the current housing market in Southeast Missouri is better than the national average.

"You have all these dynamics that drive our specific market," Johnson said. "Our economy is better, property taxes are lower, our schools are better -- all these things make our real estate market better than the national average."

An estimated 1.28 million new homes were sold in the United States during 2005. That is 6.6 percent above the 2004 figure of 1.2 million. But according to the U.S. Department of Housing and Urban Development, the Midwest saw an 18 percent decrease in the number of homes sold during 2005 compared to the previous year.

Selling as fast as they're built

However in this area, builders say new homes are being sold as fast as they're being constructed -- without offering creative incentives.

Johnson said incentives are marketing tools consumers will typically see when the market is slowing down. If a builder is offering an incentive it will probably offset other costs, he said.

"Take advantage of incentives, but know that it's part of the overall deal," he said. "If someone offers a free landscape job, know that it's part of the big package."

Cape Girardeau, Jackson and Scott City saw an increase in construction of single-family homes during 2005 -- up 27 percent from the previous year. Construction numbers are expected to be even higher during 2006, especially in Jackson, said Janet Sanders, the city's building and planning superintendent.

Rodney Arnold, a builder and developer of several subdivisions in Cape Girardeau, said in the past he has offered buyers an incentive by paying part of the closing costs.

"A builder never wants to cut the price of a home," Arnold said. "So by giving incentives, it keeps the price of the home up."

Paying closing costs or offering a decorating allowance are the only incentives home builders in the area are currently offering, with the exception of manufactured home dealers. Incentives such as a free television or washer and dryer are included with the purchase of a manufactured home from American Lifestyle Homecenter.

"We always try to offer something to make a sale," said George Gunn, manager of American Lifestyle Homecenter. He said offering incentives has been standard in the manufactured home market for a long time.

Mathes Land Developing is currently offering to pay $1,500 of closing costs. "I don't think it makes a difference if a builder offers incentives," owner Mike Mathes said. "We'll do pretty much whatever it takes to get a house sold."

Homes built on golf courses sometimes are offered with incentives such as free golf course membership or a percentage off the initial membership fees.

Dalhousie Golf Club is offering home buyers 20 percent off the initial fee of membership to the golf course and a free membership to Dalhousie Downtown, said Jackie Clark-Otto, real estate manager.

The increase in construction of single-family homes in the area is due in part to the development of new subdivisions.

The city of Jackson has seen a 30 percent increase in new home construction during 2005 -- 81 compared to 61 in the previous year. A large number of homes were constructed in two new subdivisions on the western part of Jackson.

"We have actually stayed in a growth surge since the '90s," Sanders said. "Based on the new subdivisions we've heard that are coming to Jackson, the number of new homes should stay the same or be higher."

Cape Girardeau is no different. Construction of single-family homes during 2005 set a record -- 128 -- compared to the 2004 total of 105. Robb McClary, the city's director of inspection services, said that number will continue to grow this year.

"This has been an enormously busy winter as far as construction is concerned," McClary said. "We normally have a big surge in March when builders will start getting homes constructed. But with all this good weather, they have been speeding up that process."

The majority of subdivision growth is in the north and western parts of Cape Girardeau, specifically near the Perryville Road, Lexington Avenue and Cape Rock Road areas.

Scott City has also seen the development of two subdivisions in the past year, said Tina Blattel, city collector.

jfreeze@semissourian.com