With increasingly bad economic news citing slower and slower housing starts, growing unemployment rates, falling consumer confidence numbers and fears about another round of bank and finance company defaults, an interesting strategy is being revealed that many competitive and innovative homebuilders and developers may want to consider.

Nancy Keates of The Wall Street Journal recently reported on her experience in building a new home while making some interesting observations that are a result of the woes of the economy in general and homebuilding industry specifically.

While the article begins by playing on buyers’ perceptions that it is currently cheaper to buy an existing home than construct a new one, for those consumers that conclude a home built to their specifications is superior to one that they might settle on based on cost, there hasn’t been a better time to build new than now.

For instance, while the cost of building a new home in 2007 rose 2.4% from the year prior, this was over 60% less than the increase in costs from 2005 to 2006. In fact, when the housing slump ends, it is likely we’ll see a return to higher construction costs, making today’s rates look even more attractive.

And while housing starts continue to drop (to a seasonally adjusted, annual rate of just 975,000 nationwide according to a Commerce Department report published in mod-June, the increasing unemployment rate brings one bright spot — there are now more contractors, project managers and laborers available than ever before. The result? Your new home is likely to get more attention than before and even be completed ahead of schedule. Look for this benefit to end once housing starts heat up and the demand for skilled labor increases.

And finally, the costs of many building components — from lumber to finished goods — are feeling the pinch of the stressed economy as well. Weekly price reports on wood products has recently shown falling prices compared to previous years and many contractors are feeling increasingly confident they can negotiate better deals on your behalf due to excess inventory and supplier’s struggling for any extra sale. When the housing market comes around again, don’t bet this will be the case.

So, what’s a stressed and perhaps nervous homebuilder or developer to do with this information? Well, take a lesson from experienced investors — when prices are plummeting, there are more opportunities than ever before. Take this same tact when working with your buyers. Explain to them the advantages of planning and building a home that perfectly matches their needs and desires — but also include things like the added attention they’ll now receive, the prospect of accelerated delivery schedules and even that you now have access to lower-cost supplies, labor and other hard goods associated with the building of their new home.

There’s a silver lining to every story — as they say in public relations, there’s no such thing as “bad PR” — it’s all in how you deliver it.

National Public Radio (NPR.org) the other day told the story about a California homebuilder who’s had enough with holding inventory in an ever-stagnating economy and decided to take a rather drastic action — placing their final new construction homes up for auction during a one day sale.

According to Mike Davin, president of CataList Homes, who the builder, Cal Coast Development, worked with to liquidate inventory, 18 of 24 homes offered sold in 38 minutes at an average of 87% of the last list price. Similar strategies have been taken in Portland, Oregon, Scottsdale, Arizona and Omaha, Nebraska. Of note, most builders or agents are claiming that bidding frenzy is bringing them prices close to their desired selling price.

So we gave this tactic some thought — after reading what one might think is yet another doom-and-gloom indicator of the housing bust — and came up with a strategy for you homebuilders and real estate professionals to consider to capitalize on the buzz and excitement that this rather radical decision seems to have created.

The articles observed “Hands went up all over the room. The bidding was frenzied and houses were going like they were free.” and “The ‘crowded ballroom’ and rapid bidding by those in attendance suggests a crowd of buyers are sitting on the sidelines waiting for better deals to come along.”

There’s a well-documented auction phenomena called the Winner’s Curse that happens when large groups of interested buyers gather in an open bidding environment. In short, the winner’s curse says that in such an auction, the winner will tend to overpay. Typically, each bidder independently estimates the value of the item up for bidding. The severity of the winner’s curse increases with the number of bidders. This is because the more bidders, the more likely it is that some of them have overestimated the auctioned item’s value.

What better way to create a sense of urgency and exclusiveness, drive attendance and encourage those rabid, desperate buyers seeking a bargain, than to embrace this concept for some of your communities where just a few homes stand waiting to be purchased. With inventory of existing homes clogging the market and sucking up any possibility of selling a new construction home — especially those where you no longer have sales staff onsite to handle drive-by prospects — consider actually marketing the actual auction — as well as a “pre-public opportunity” — as an exclusive occasion for select prospective buyers that may already have relationships with you.

Pay special attention to your lists of prospects who initially contacted you about the community — they showed an interest at one time, now capitalize on that by by letting them know that they can act an opportunity before the public auction.

You’re familiar with grand opening events when a development launches or reaches a significant stage; plan and promote a pre-auction event intended to give those interested prospects one last chance to act before the homes go on the block. Be sure to impart how well-attended the auction will probably be and that you expect the final selling prices to be near your listing prices. And if your pre-auction event fails to harvest any sales, at least it serves as another vehicle to build excitement — and attendance — for the auction itself.

So don’t look at home auctions as a desperate, last-ditch tactic — as the song goes, “know when to hold ‘em, and know when to fold ‘em.” Just be sure to do either smartly and with some strategy.

Smart marketers should look to their best brand advocates for unique promotional opportunities — past customers who have graphic personalities, surprisingly colorful stories and experiences that trumpet the passions of your organization. Here’s one example, well told, Old Chap.

We StumbledUpon an interesting web site the other day, BeABritDifferent.com — an innovative microsite created by Britain’s national tourism agency, VisitBritain. This decidedly subtle site showcases what it’s like to live in — and travel within — Great Britain from the perspective of a handful of its very outspoken citizen advocates.

Consider the story of Jon from Wellington, who spent two years of his early life living in a caravan without running water or electricity. He’s a fan of Pink Floyd, Charles Darwin and “making cool stuff happen in Shrewsbury.” Or Liz, a married mom of three adorable kids who like to surf, watch the kids “play rounders” and wrote a recent blog post about touring the pubs of Cornwall by train. Ah, those Brits.

And while VisitBritain could have wooed us with tantalizing pictures of mossy castle ruins to explore, bustling urban streetscapes to shuffle through and lists of widely-visited cultural attractions, they instead have encouraged their passionate citizens to create profiles, list their favorite neighborhood haunts and impart little-known local secrets through a web site that encourages you to make an intimate connection with each contributor.

You can read each person’s funky and enticing journal entries, befriend them on MySpace and Facebook, learn more about the regions they live in and subscribe to RSS postings from favorite bloggers or the site in general.

Along the way, you’re treated to such gems as lists of the top things on British minds today (among the top theatre picks: predictably, “Monty Python’s Spamalot” and the delightfully unexpected “Chicago” — seems there’s still the misguided intrigue for the Windy City’s storied past).

Sure, the site is full of monthly events, travel deals, recreational opportunities and even online shopping for some of Britain’s best-known brands, but it’s the decidedly British ambiance that the site instills that endears you to this destination.

So, we ask you smart marketers to consider how you might use the intimate conversations, passionate stories and little-known insight of some of your best — and most intriguing — customers to your advantage.

Consider setting up and promoting a web site who’s sole purpose is to share the experiences your customer advocates have had with your company or organization. Keep your brand to a minimum and let the narratives and encounters clients have experienced be subtle examples of why new customers should come knocking on your door.

Promote the unique and unusual — and they absolutely need to be out of the usual — personalities that get created by setting up Facebook and other social networking sites and encouraging befriending.

Create videos to post on branded YouTube channels of your advocates in their own funky surroundings, telling their stories and sharing tales. Collect their pictures into libraries on Flickr and cross-promote their views of the world to their growing fan base.

With a little forethought, consumer advocacy can be utilized to promote your brand, your products or services, and the culture of your organization to online prospects who are hungry for unique experiences and personal sharing.

I must be listening to too much NPR these days — that or their reporting too much on the homebuilding industry’s woes! A recent spot on the radio (listen here and see a summary) hit a bit too hard to home. It was a story that originated here in Chicagoland about some of our larger homebuilders that were going bankrupt or having dire financial problems.

The gist of the story was that buyers of new construction homes were nervous to purchase from some of the larger builders as many were either going out of business or drastically curtailing their business. The story told the tale of one family who drove past their half constructed home, only to hear their newly installed furnace furiously pumping heated air through all of the open windows spaces — the actual windows were never installed!

It’s a sad story for sure, but I think it’s also a lesson for the homebuilding industry — consumers are so scared that you’ll disappear off the face of the earth after the next earnings report that you had better approach business in a different way.

I’d recommend builders — especially those who can claim a long, time-tested history or come from a proud family business-oriented perspective — take every opportunity to let their buyers who haven’t closed — and especially those prospects who they’ve had an interaction with — that they have no plans to leave them in the lurch.

Use whatever means are at your disposal — personal letters from the owners, individual phone calls, frequent press releases that shout out any new piece of good news (and start looking for those aggressively — even the simple sale of a single home now has untold significance), constant solicitation to local newspapers to write “we’re still around and strong” stories and even weekly e-mail contact with each and every contact from your sales staff.

It’s war out there and the news never seems to be good. Now is NOT the time to stay low and hope for better days. In fact, I would challenge each of you that the need to advocate, champion and promote yourself is important more now than at any other time. If you’re thinking cutbacks and riding the storm out, you’re already well on your way downward.