The residential real estate market is making gains as sales increase in many areas. We have witnessed this as we have sold out of our finished home inventory in several communities and we are starting to see many of our communities enter into presale agreements to build homes for delivery in 2010. While pre-sales are just beginning to pick up, this is an important indicator in terms of economic recovery, along with the stronger home sales. This is all good news for homebuilders, and it�s important to take note of what the return to pre-sales could mean for the real estate economy as well as the factors that are attracting buyers to pre-sales.

Factors that are attracting buyers include the desire to take advantage of current construction and financing costs, which are at their lowest in years, along with the $8,000 Federal tax credit for first-time buyers. We have also been able to offer buyers low interest rates through our lenders. Buyers have taken a “wait and see” approach, and in the recent past, some have gotten lower prices on homes that may have been overpriced to begin with. However, others have found that the home they thought would drop in price has since sold, leaving them with the sense that they should have moved more quickly. As a result, we are increasing the number of homes we start construction on each month and are experiencing a rise in requests for presale homes.

Importantly, a return to presales bodes well for the real estate economy as we see prospective buyers coming to the market with a sense of confidence demonstrated by their willingness to invest in a home that has not yet been built. This illustrates that homebuyers have enough faith in the state of the market to purchase a home that will provide long-term value at a fair price.

This confidence also represents buyers’ sense of trust that the builder who commits to making their home today will be on hand in the future to provide any promised routine maintenance and honor any guarantees associated with the home. Perhaps most importantly, this new confidence represents a buyer’s trust in their own personal finances to make such a commitment.

While presales are a positive indicator for the real estate economy, another important factor affecting the real estate economy is financing. Today, before a home is purchased, the buyer goes through a very thorough process to get approval for financing. The easy lenders have fallen to the wayside, and once again buyers need to actually show that they have the financial stability to support a home purchase. And while construction costs and tax incentives help drive sales, buyers still have many choices in today’s market. Moving from selling existing stock to presales has a lot to do with factors that go beyond the financial realm to attract buyers to a particular home or community, especially prior to that home or community being built.

Now homebuyers are starting to re-prioritize what they look for in a home, seeking solid construction, green design and strong communities in place of the luxury amenities they might have sought in years past. Homeowners are also seeking a very positive buying experience; one that helps them feel assured they are making the right choice when it comes to making one of the biggest purchases, if not the biggest, of their lives.

Therefore, by the time it comes to make a purchase, the home buying process should be easy and enjoyable.

When a buyer is able to talk an in-house designer about the details that will make their home unique, they develop a sense of ownership early on. By the same token, when a buyer has a chance to meet the builder and see the level of care and quality going into construction, there is a greater sense of ownership generated. This level of service has allowed us to stay ahead of the competition.

As we see it, there is a steady return to common sense buying practices as the economy stabilizes and buyers take the time to educate themselves on what they really need in a home. If buyers are treated well - allowed in on the process as their home is built while being offered homes and communities of high quality and access to financial tools - pre-sales will continue to be a key component of this return to common sense and another indicator of a recovering economy.