This is a response to Have we learned anything? from Cory Schouten at the Indianapolis Business Journal.

When you look at the Indianapolis market (which is relatively stable) you’ll find that there are 15 builders that put 15 or more homes in the ground each year. Yet there are 303 builder members registered with the Builders Association of Greater Indianapolis. That means that the average builder will build between 1.5 and 2.7 homes this year.

So how do builders stay competitive? What makes one builder stand out from the others?

Every homebuilder in town builds a top-quality home at an affordable price (just ask them). Some are more affordable than others…but they all adhere to published standards.

Many builders have tried to differentiate through price. Every homebuyer wants to feel like they’re getting a deal. That’s why many builders provide a free basement or $20,000 in free designer upgrades as a sign-today bonus. But this ‘gimmick’ kills home values in the neighborhoods. If I buy a house today and get $10,000 in free options and you buy next week and get $20,000 my home instantly loses $10,000 in value. Inexperienced new home buyers may not realize this at the time of purchase but it’s been an industry standard for years.

I applaud companies like Estridge for creating a valuable program to move spec homes in an oversaturated market while not discounting to harm the values for existing homeowners.

But the program only works because the buyer has to put ’skin-in-the-game.’

Paul posted “the customer must put up their own money, typically in excess of $20,000.”

I think as a Indianapolis homeowner and concerned citizen that there are some companies that are trying to do the right thing in a difficult market. I only wish more builders tried to build value into their homes and not discount to make a quick buck.