Incentives are reason for building during slump

MILWAUKEE -- One glimpse of a sun-kissed cornfield sprouting a "for sale" sign and Jeri Meyers threw caution to the wind.

"We weren't even necessarily looking to build a home. We just found this great lot through a fluke, and it was where we wanted to be -- closer to my family," Meyers said.

She and her husband, Marty, discovered that 5-acre parcel in Germantown, Wis., in May 2006 -- a bad time in the home trade. A large number of homes had landed on the market just as demand suddenly shriveled, the sudden and unhappy end to a five-year boom.

Since then sales have slowed, increasing pressure on prices. It might be a prime time to buy, but it sure is not to sell, and the Meyers family already had a home in New Berlin, Wis.

"Maybe this isn't the best time," Jeri Meyers said. "But it just felt right."

Homebuilding has been hard hit, but it hasn't come to a complete halt. Some people still find that this is their moment to get the house they want at a price they can live with.

As the Meyers family's $440,000 semi-customized home nears its December completion date, things seem to be falling in place, Jeri Meyers said recently. Their New Berlin house sold last month for $315,000 after about six months on the market.

Of the new place, she said, "the service was terrific and I feel we got some great deals," including an extra foot of ceiling height in the basement for no extra charge and free ceramic tile work in the bathroom and around the lower-level bar.

"Was it a super deal? No. I've heard some people say, 'Oh, our builder did our entire rec room for free' -- a $30,000 or $40,000 discount. And I think, 'Yeah, but they're probably taking that off somewhere else. What I want is a great house, and that's what we're getting," Meyers said.

Consumers' gain comes at a price for builders.

"There's been a lot of pressure to let staff go and reduce overhead, or lower (profit) margins -- a very difficult decision," said Bruce A. Johnson, president of the Milwaukee area's Metropolitan Builders Association and head of BDC Building Design & Construction Inc. Staff crews are considered more reliable and often, more skilled, than outsourced help, Johnson said, "but builder profit margins are already really low."

Meanwhile, "If you want extra attention, now's the time," said Matt Moroney, the association's executive director.

Just about everything in the housing market that could go wrong has gone wrong since the nation's 2001-05 boom busted.

The economy is bumpy, ill-advised loans have triggered a tidal wave of foreclosures, and the inventory of unsold homes has ballooned. Economists warn that we may face the kind of broad-based price decline not seen since the 1930s Great Depression.

It takes steely resolve to commission a new home under such circumstances. However, housing was never meant to be a short-term investment, but a slow, steady one, economists say.

Today's downturn provides some compelling financial incentives to proceed. Contractors have cut prices, materials costs are stable, work crews are readily available and lenders are hungry for credit-worthy customers. All along the line, service has changed for the better, say builders and some customers as the housing industry competes for fewer customers.

"Our builder was fabulous to work with -- very responsive to our needs," said Katey Collins, who closed last December on a $405,000 Mukwonago, Wis., semi-custom home.

Fiscally tight times are the new reality for customers and contractors alike, builders say.

"We've reduced our base pricing -- anywhere from $25,000 to $50,000 -- to be more competitive. That's our way of saying, 'We know you're having a hard time selling your houses. The value you feel you're losing, we'll offer,"' said Craig Vermeulen, director of sales and marketing for William Ryan Homes Wisconsin in Brookfield. The company's parent firm is based in Illinois.