Home Builders Wonder: Will They Come?
Market Concerns Palpable at Yearly Trade Show
With housing sales down and inventory up, a thinner crowd attends the International Builders Show in Orlando.
(By Gary Bogdon For The Washington Post)
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Friday, February 15, 2008; Page D03
ORLANDO -- The cavernous convention center, the site of this week's International Builders Show, is lined row after row with slick display booths and polished sales reps peddling retro-style ovens, state-of-the-art foam insulation and a vegetable-oil-based product that plugs leaky ponds.
But the crowd is a bit thinner than in the past, and the mood among the gathered home builders is noticeably different as their industry drags through the worst market in years.
"A few years ago, everyone was very happy and smiley," said Douglas Jones of Keystone Builders in Richmond. "Last year it was a touch off. This year it's a little more serious. It's perceptible."
With housing sales foundering, inventory way up and the future of the industry hazy, the show, with 1,900 exhibitors and nearly 100,000 attendees, is more angst-ridden as builders look for ways to stay afloat until there's a turnaround. Attendance is expected to be down about 5 percent.
"There's a deep sense of concern about the market right now," said David Seiders, chief economist for the National Association of Home Builders, after sitting on a panel of experts who delivered a sobering talk on the state of the industry.
"This time last year, it looked like the demand side of the market was stabilizing. Our forecasts were that, yeah, 2007 will be a down year but it won't be that bad," he said.
"Then the entire subprime debacle hit, other shocks to the financial system hit. A lot of builders are frankly bewildered as to what in the world has happened. I can't go 15 feet without being grabbed by somebody trying to talk about it."
Seiders now predicts a turnaround in the latter half of this year, but other less-optimistic economists see no improvement until 2009 or later.
U.S. home construction last year plummeted at a rate not seen since 1980, according to the Commerce Department. Some home builders have filed for bankruptcy protection. Others have posted huge quarterly losses while laying off workers, cutting production and selling off land. In the fourth quarter of 2007, Lennar of Miami lost $1.2 billion, and KB Home of Los Angeles lost $772.7 million.
Not everyone here is worrying.
Tim Hensley of the Hensley Custom Building Group of Cincinnati said his company, which builds homes for up to $3 million, has taken steps to survive by cutting overhead, reducing prices on unsold homes and sticking to building homes under contract. Things have been looking up lately, he said.
"We had a pretty brisk November, December and January," he said. "We've bottomed out and we're headed back up. I'm an optimist. We're of the opinion the higher-end buyers come back first."
