Cincinnati Builders Get Creative to Clear Out Housing Inventory

As the lull in demand for mortgage loans in Ohio continues, Cincinnati Realtors, builders and developers are having to be more creative and assertive in their marketing strategy.

The Home Builders Association of Greater Cincinnati is leading such a charge this month, launching a New Home Showcase that highlights 79 homes spread out in four counties. The homes range in price from $187,000 to $1.2 million, totaling more than $40 million worth of property.

The need to move property: The event was planned to help builders cut into an inventory that will take at least 11 months to absorb, according to estimates by the Multiple Listing Service of Greater Cincinnati. A year ago, that figure was 7.46 month; in 2004, it stood at 6.35 months.

“We have a higher inventory than we’ve had for some time,” said Dan Hendricks, executive director of the Home Builders Association. “As much as builders are risk-takers and as much as they try to predict what’s going to happen, we often get our information the same way everyone else does.”

Builders experiencing a demand for their product stockpiled homes while the market was hot, accounting for a record number of housing starts in 2003, 2004 and 2005.

Now, though, residential building permit activity in the Cincinnati region is down almost 25 percent from last year through August. Builders are trying not to be alarmed at the slowdown, as they claim this happens in cycles and once the inventory is absorbed, demand for home mortgages will pick up.

“When this cycle hits, there is a parade of homes,” said Bob Lucke, president of Cincinnati’s Robert Lucke Homes Inc. “Builders want to unload their inventory for next year, and it becomes a buyers’ market.”

Reasons behind the slowdown: Housing sales typically slow due to higher mortgage rates or higher unemployment. While the interest rate has increased - it dropped as low as 4 percent a couple years ago - most buyers can still get an upper 5 percent or low to mid-6 percent interest rate, compared with previous spikes of 8 percent or 10 percent.

Meanwhile, organizations such as the Home Builders Association are trying to speed along the recovery process.

In addition to the home showcase, it is working with the Cincinnati Area Board of Realtors and the Northern Kentucky Home Builders Association on a joint marketing campaign encouraging people to Buy Now.

The builders association is considering a second Homearama in 2007, featuring homes for empty-nesters. And to stimulate new home construction in Hamilton County, it has pushed through the X Plan, a way for builders in subdivisions to speed up the approval process through the county’s building department.

Finally, Realtors are doing their part by educating potential buyers about buying in a down market, the benefits of buying rather than renting and the significance of the lower interest rate and potential tax savings.

“The last few years, people were buying houses and weren’t concerned about the ‘why now,’ ” said George Meinhardt, president of Star One Real Estate. “It’s the return to the basics. Why should we rent and why should we buy?”

It’s a question on the minds of many potential borrowers. Let us know how we can help answer it.