Philadelphia, PA, Aug. 20--Orleans Homebuilders came a little late to the design-center concept, but so far the idea has paid off. It also has given the Bensalem, Pa.-based developer new insight into the tastes of the post-Sept. 11 home buyer, according to the Philadelphia Inquirer.
“Despite the economy, our buyers have actually increased the amount they spend on options,” said Linda Kelley, a vice president of sales and marketing who successfully argued for creation of the design center, which opened in mid-May.
“They come here looking at the standard features of a $350,000 house, and then start coming across the hot-button options,” she said.
As the options begin to add to the base price of the house, buyers have a tendency to pull back a bit. But when they figure they can pay for options over the life of a 30-year mortgage, they appear relieved, Kelley said.
Builders say low fixed mortgage rates over the last two years have provided as much of an impetus for spending as the tendency to focus on hearth and home after the terrorist attacks of September 2001.
What about worries about the economy and jobs?
“People who buy new homes aren’t afraid of losing their jobs tomorrow, otherwise they wouldn’t be buying new homes,” Kelley said.
The sharp increase in interest rates since June hasn’t yet affected the number of bells and whistles that buyers are adding to their houses.
Mortgage applications have declined since June, “but the drop is due almost entirely to the very large drop in refinance activity, not mortgage origination,” Jay Brinkman of the Mortgage Bankers Association said.
“The level of applications to purchase homes showed only a modest drop, and is still near all-time highs,” Brinkman added.
The National Association of Home Builders says the typical homebuyer in the U.S. spends $5,000 to $7,500 in upgrades.
Move-up buyers, typically better off financially and looking for amenities they didn’t have in their last houses, tend to go for plenty of options.
First-time new-home buyers are more sensitive to increases in mortgage interest rates, and concern about the size of monthly payments can lead them to put a brake on options.
For first-time buyers in the $200,000 price range, options run $2,000 to $2,500--the meat-and-potatoes stuff such as carpet padding, vinyl kitchen flooring, and stone fireplaces, according to area builders.
The design-center concept originated with Kaufmann & Broad of Los Angeles, the largest residential developer in the western U.S.
The idea was to create a one-stop-shopping opportunity for buyers, especially in areas where the developer was doing a lot of building.
For example, the company’s 19,000-square-foot Las Vegas outlet was designed to serve the neighborhoods Kaufman & Broad has been building, a dozen master-planned developments in the desert surrounding the city.
At development sites, the sales personnel should focus attention on “selling the house, not the options,” Kelley said. “When the displays are in the basement, and the salesperson is on duty upstairs, he or she can’t leave potential buyers to explain carpet choices.”
