Survey Shows Economy's Impact on Builders from Tri-State, Mid-Atlantic Regions

VOORHEES, N.J., Feb. 16, 2010 — When the economic recession took effect, the real estate and construction industries were hit especially hard. Developers put projects on hold as expenditures rose and funding became increasingly harder to obtain. Many developers changed their focus from building new projects to focusing on selling-out inventory and finished communities, offering various incentives to offset the down housing market.

In order to better understand how builders and developers have changed the way they do business in the past year, the Strategic Alliance created a survey that was distributed to more than 1,000 builders and developers throughout the Tri-State and Mid-Atlantic regions, as well as Pennsylvania and Florida. Among the responses, 42.8% of builders mentioned the current trend of open floor plans for apartments, which is demonstrated here at The Lofts at Washington Town Center in Robbinsville, N.J., which was designed by Feinberg & Associates, P.C. and developed by Sharbell Development Corporation. Photo: Fred Forbes Photogroupe

In order to better understand how builders and developers have changed the way they do business during this difficult period, the Strategic Alliance, a group of eight real estate-related companies, created a survey that was distributed to more than 1,000 builders and developers throughout the Tri-State and Mid-Atlantic regions, as well as Pennsylvania and Florida.
“The target market of the builders who responded ranged from first-time buyers, seasonal homeowners, rental properties, residential homes and 55+ active adult communities,” stated Bill Feinberg, president of Feinberg & Associates, P.C. and founder of the Strategic Alliance. “Many of these builders have mixed-use and multifamily projects lined up, waiting for the opportune time to break ground.”
At years end, when questioned about how they see the current market compared to a year ago, 25% of respondents thought the economy is easing up, while 46% saw it getting worse or remaining unchanged. “Although some builders are positive things are changing for the better, there is still a lot of doubt and trepidation moving forward,” added Feinberg.
Builders also revealed buyers’ most sought-after upgrades, options and design features for their new homes: 57.1% look for upgraded appliances, 42.8% want open floor plans, while others request kitchen and bathroom extensions and finished basements. “These selections have been part of a growing trend in new construction among all housing types,” stated Bill Becker, Alliance member and president of the William E. Becker Organization.
Cutting Back Costs
Companies across the board have experienced layoffs and cut back on costs as the economy steadily declined. Among survey respondents, 25% noted their strategy has remained unchanged, while 35.7% cut advertising dollars. “These figures are not surprising as the normal cost-saving strategy is to cut marketing and advertising dollars,” noted Don Smolev, Alliance member and president of The Marcon Group. “At the same time, 67.8% of builders surveyed are utilizing new techniques like Internet marketing and print and broadcast advertising (50%), while 60.7% continue to use traditional methods such as brochures and flyers. The ‘new marketing’ employs all possible elements available, including a great Web site, e-mail blasts, Facebook, Twitter, pay-per-click, online media and print ads, direct mail as well as traditional print and public relations. Each brings a percentage of the total traffic required to sell successfully.”
To give buyers a peace of mind and assist homebuyers with their financing issues, 50% of builders surveyed are now offering home buyers financing assistance, and 42.8% are picking up the closing costs to save the buyer money.
Finally, after the sell-out of a community, builders were asked if they review their actions to obtain a better grasp on their successes and problems during the selling process. Most respondents (64.2%) noted they review the process, while 21.4% review the process “sometimes.” 
“The review process can be extremely beneficial in avoiding future mistakes and learning what works best with buyers during a given time period,” stated Joe Di Bernardo, Alliance member and president of Joseph L. Di Bernardo & Associates. “Almost 80% of the builders who take a look back at the sales process agree that it is a step in the right direction.”

---

About the Strategic Alliance
The Strategic Alliance offers builders and developers a unique scope of services, from the initial acquisition of land to the final sales and marketing of a development. The partnership combines the talents of eight multi-disciplinary firms that can collaborate on projects to take advantage of new opportunities in today’s tumultuous marketplace, including architects; acquisition and development professionals; civil, environmental and structural engineers; financial resource experts and sales and marketing professionals. By sharing information and knowledge across company borders, the Strategic Alliance leverages areas of synergy. The combined workforce of member companies exceeds 500 professionals with offices in the New York Tri-State and Mid-Atlantic regions.

---