Ore. builders turn to incentives to move inventory

PORTLAND, Ore. (AP) With the Portland region facing its largest housing inventory in three years, builders are starting to reduce prices and offer incentives to clear out stock. And they are starting to cut back on building.

"There's a lot of standing inventory and real price-point issues that are going to slow the pace of construction," said housing economist Jerry Johnson, who advises home builders and local governments.

Though Oregon's housing market remains solid compared with many other parts of the U.S., sales are down. In August, pending home sales in the Portland area dropped 18 percent compared with the same month last year, according to the Regional Multiple Listing Service. Officials estimated it would take more than six months to sell the active residential listings at that pace. In June 2005, there was only a 1½-month supply.

Builders and real estate professionals attribute the slowdown to tightening credit, growing public uncertainty and a surplus of overpriced houses on the market.

As a result, companies are using incentives such as gift cards and trips to entice buyers into taking finished houses. Luxury builder Renaissance Homes has — with some conditions — offered to "pay your mortgage for six months," said Kim Whitman, the Lake Oswego-based company's vice president of sales and marketing.

"We are trying to combat the negative side of the market."

Whitman said the company's sales this year will be on par with last year but not as strong as projected: "It's just not as crazy as it once was."

How lot developers and builders fare in a cooling market will depend on how they prepared themselves during the boom, said Jim McCauley, vice president for government affairs for the Home Builders Association of Metropolitan Portland. "Those that had a conservative approach are going to weather this easier than others. . . . Others are going to be stretched."