Homebuilders in the central San Joaquin Valley are offering free upgrades, financial incentives and even housekeeping to lure buyers back into a market that has struggled to recover since the recession.
A McCaffrey Homes radio spot tells listeners about discounts on pool-sized lots, along with free housekeeping and lawn maintenance for a year.
The Centex website promotes a discount on closing costs. The national builder also has a $10,000 incentive for home upgrades.
The builders are counting on the goodies to reverse a slide in new home sales that began when a federal homebuyer tax credit ended in April. A drop in sales was anticipated -- but now, amid signs that the economic recovery is stalling, it looks to be steeper than many had expected.
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In Fresno County, for example, just 95 new homes were sold in July, compared with 193 in June, according to DataQuick, a San Diego-based real estate research company. The same trend was evident in every other Valley county, and it reflects what's happening nationwide.
Homebuilders have been bracing for a slide, and now many have returned to a sales tactic not seen on this scale since 2008, when the full effect of the real estate downturn was becoming apparent.
That year, about 66% of homebuilders nationwide offered upgrades at a reduced cost to reignite sales, said Stephen Melman, director of economic services at the National Association of Home Builders. The percentage tapered off, but by June, it had shot back up to 50%, according to the latest survey.
Even record low mortgage rates haven't helped. This week, the average rate for a 30-year fixed loan fell to 4.42%, according to mortgage buyer Freddie Mac. That's the lowest since Freddie Mac began keeping track in 1971.
"For some people, they need other incentives to put themselves in a new home," said Jacque Petroulakis, director of public affairs for the Southwest division of the PulteGroup, which merged with Centex last year.
Giving a homebuyer a new countertop or a higher-end choice of flooring might not seem like a big deal, but to some buyers it could mean the difference in making a sale, Melman said.
Homebuilders in California also hope to benefit from a $10,000 state tax credit for buyers who purchase new homes.
Earlier in the year, a second group of buyers also was eligible for the state credit: first-time buyers. But the California State Franchise and Tax Bureau stopped accepting applications from first-time homebuyers as of Sunday. This was done so that the bureau could check on whether enough valid applications already have been received to allocate the full $100 million in tax credits.
Even though first-time buyers can no longer apply, the tax credits are still available for buyers who purchase a new home.
"As long as you have a job, you've never had a better chance at owning a home," Melman said.
Not everyone is biting, but some -- like recent Fresno State graduate Jennifer Montee -- couldn't resist.
Montee just started working as a project engineer after graduating this year. She had plans to move into a bigger apartment, but instead bought a new home. Incentives made a difference, she said.
In June, she heard the McCaffrey radio commercial, which tells listeners they can own a new home for monthly payments below $1,200.
That's less than the rent on a two-bedroom apartment with garage that she was planning to move into. The rent was $1,335 a month.
"It's great for me, because I never thought I'd be able to buy something on my own," said Montee, who bought a home in the Braden Court neighborhood in Clovis.
Montee's monthly mortgage -- which includes home insurance, property tax and homeowner-association fees -- will be $1,239 a month. She qualifies for the state home tax credit and also received the home-maintenance incentives.
The lawn and housekeeping incentives were huge perks that made the deal that much more convincing, said Montee, who is single.
Homebuilders are trying to meet buyers' needs.
Last year, for example, McCaffrey Homes offered swimming pools in the Palmina community. This summer, it's offering something it has never offered before -- services like home maintenance.
"It seems as if everybody is working longer and harder in today's economy, so this helps free up their time so they can be with family and do the things they enjoy doing," said Karen McCaffrey, vice president of the McCaffrey Group.
Radio ads promoting the incentives have driven traffic into sales offices, she said.
At Centex, the focus has been on financing options. The company has programs to help qualified buyers lower their monthly payments or cover closing costs.
The company also offers a $10,000 incentive for upgrades such as higher-end home appliances, countertops, flooring and window accessories.
This month, Granville Homes is taking its financing options even further by offering buyers a 30-year fixed-rate mortgage loan with a 3.75% interest rate. Other packages include a keyless entry or tile and paint upgrades.
"We try and do our best to listen to our buyers and find out what motivates them and what makes the buying process easy," said Richele Kleiser, marketing manager.
In this economic climate, it makes sense that homebuilders are trying to persuade buyers to buy now, said Fresno State marketing professor Bill Rice. Their message: This is the chance to get a new home with all the amenities in a package deal that is cost effective.
"Now is the time to do it," Rice said. "When they throw amenities in, it stacks the cards up and is really a call to action."