Weak home sales could lead to slow holiday for county’s retailers

Retailers change strategies while real estate experts say decline was expected

‘‘It’s definitely slowed things down, but ... I don’t think it’s a crisis,” he said.

John Kortecamp, executive vice president and CEO of the Homebuilders Association of Maryland, agreed, adding that although builders have had significant layoffs, they will survive in the long run.

‘‘People are pretty well adjusted to this market cycle now; it’s just a matter of weathering it,” he said.

The negative climate is coming at an inappropriate time, however, for retailers, who are preparing for holiday sales, a period that tends to reap the most profits.

‘‘This could drag on holiday sales because if people are concerned about the value of their homes, they’re inclined to spend less money,” said Peter Morici, a business professor at the University of Maryland, College Park.

Although holiday sales are expected to rise this season, as they do every year, according to the National Retail Federation, economic obstacles posed by the housing industry will keep that gain slim.

‘‘With the weak housing market and current credit crunch, consumers will be forced to be more prudent with their holiday shopping,” Rosalind Wells, chief economist at the association, said in a statement.

The projected 4 percent nationwide holiday sales increase, to $474.5 billion, is below the 10-year average of 4.8 percent. It would represent the slowest nationwide holiday sales growth since 2002, when sales rose 1.3 percent, according to the association.

When people have equity in their homes, it frees up disposable income that could be spent shopping around the holidays, said Tom Saquella, president of the Maryland Retailers Association. In the current market, home values are lower and don’t have the same equity, he said.

Prince George’s County retailers remain hopeful for a great holiday season, and some are shifting their strategy, James A. Dula, president and CEO of the county Chamber of Commerce, said in an e-mail. Wal-Mart department store, for example, is reducing costs on select gift items and started holiday sales three weeks earlier than usual on Nov. 2, Dula said.

‘‘I expect to see this trend utilized by other retailers as merchants strive to utilize the entire season in order to make it a festive and prosperous shopping season,” he said.

Some retailers at The Mall at Prince Georges in Hyattsville are also starting promotions earlier this year, said Victoria Clark, mall marketing director, in an e-mail. The mall will launch a new e-newsletter program where customers will receive weekly updates about store promotions and special events, she said.

‘‘We want our shoppers to feel the excitement of getting started on their holiday shopping, taking advantage of great early morning deals at our stores, as well as entertainment, refreshments, giveaways, contests and more,” she said.

Brad Chandler, founder and CEO of Express Homebuyers, is one of the few in the housing industry seeing a slight upswing in the company’s bottom line. The company, which buys homes and upgrades them to increase the value before selling at a higher price, purchases the bulk of its houses in Prince George’s.

Chandler did not disclose the company’s profits, but said it will be higher than in 2006, although not a dramatic increase.

Clients include people who are behind on their mortgage, those who don’t want to wait months to sell their house, and people who would rather not deal with a real-estate agent, which can include the intrusion of strangers inside the home for viewing, he said.

Approximately 50 percent of the homes bought by the company are in Prince George’s County.

The rental market also is benefiting from the slump, according to Morici.

‘‘When people can’t own, they rent,” he said. ‘‘People have to live some place, and they’re not all doubling up with their parents.”