Builders’ Use of Incentives After the Tax Credit,

The study, “Builders’ Use of Incentives After the Tax Credit,” sheds valuable light on ways that builders are coping with the market slowdown following the tax credit. About 73% of respondents this June reported that they were currently using and planned to continue using at least one incentive without changing it for marketing or other purposes. At the same time, many builders — though far from a majority — said they were adjusting their incentives programs, by changing existing incentives or initiating new ones, to compensate for not having the tax credit. Among the common types of sales incentives that builders have been employing are price reductions (cited by 54% of respondents), offering options or upgrades at no cost or a reduced cost (50%) and paying closing costs (44%). Of the one-fifth of all builders who are adopting a new incentive and/or modifying one they have already been offering to compensate for loss of the tax credit as a marketing tool, the most common incentives for filling the gap include: options or upgrades at no or reduced cost (10%), discounted home prices/reduced margins (9%), paying closing costs or fees (6%), offering green features at no or reduced cost (6%), absorbing financing points for buyers (5%), and mortgage rate buy-downs (4%). Read more about this fascinating study in the cover story of the latest Nation’s Building News,