Housing slump spurs creative building

PORTLAND – The foundation is in and workers have begun framing the first home in Gray Goose Estates, a new subdivision in Westbrook. It’s a 1,400-square-foot cape with a base price of $204,000, roughly $50,000 below the median home price in Cumberland County.

That price point is no accident. The builder, Windham-based Custom Built Homes of Maine, had initially planned “move-up” homes, with garages, paved driveways, gas fireplaces and other extras that would sell for $270,000 or so. But as the housing market slowed and potential customers had trouble selling existing homes, the builder redesigned the project to make it more affordable for first-time homebuyers.

The strategy is working. Five of the 20 homes in the first phase went under contract quickly.

Cutting amenities is one way southern Maine homebuilders are weathering the national downturn. They’re also offering buyer incentives, writing contracts contingent on the sale of existing homes and lowering prices. Some, like Custom Built Homes of Maine, are staying away from price segments already burdened with too many “for sale” signs.

“We’re trying niches that keep us out of the $350,000 to $400,000 market,” said Ron Smith, the company’s owner.

Builders such as Smith say these adjustments really just reflect a correction, a return to a more-stable construction environment after a few hectic years. But housing-start figures for 60 towns in southern Maine, collected by Construction Data New England, show that the brakes have come on fairly hard.

Through the end of October, the number of new building permits dropped 27 percent from the same period last year – 1,515 compared with 2,069. They’ve fluctuated since 2002 but have stayed above 2,000 until this year.

Average prices, meanwhile, continued to climb – at least until recently. They’ve risen from roughly $163,000 in 2002 to $225,000 today. Those figures don’t include land or utility costs.

Real estate markets are notoriously local. Maine, with its low population growth, rarely sees the overbuilding and speculation common in, say, Florida or Arizona. Those regions helped send the industry in a swoon last month that saw home building fall to its lowest level in six years, down 14.6 percent, the government reported.

To move inventory, a survey by the National Association of Home Builders found, 55 percent of builders were offering incentives; 42 percent paid closing costs; and 26 percent were picking up points on mortgages. Similar practices also are in play in Maine.

Kasprzak Builders of Waterboro develops condominium communities in Wells, Kennebunk, Gorham and Brunswick. The company typically builds 60 units a year and has had to make adjustments to stay on track.