Builders at annual show lack optimism, attendance

ORLANDO - The International Builders' Show opened today without the boundless optimism that characterized the annual convention of home builders from 1998 to 2005, when the real estate market was booming.

Attendance numbers were down, and the behemoth Orange County Convention Center - jammed last year with a record 104,000 builders from all over the country - seemed strangely quiet.

"We're expecting 10 to 15 percent fewer this year," said Donna Reichle, a spokeswoman for the National Association of Home Builders. "The official numbers aren't released till Saturday, and we're pinning our hopes on on-site registration."

Filling the four-day show schedule are programs that reflect the gloom besetting the residential-construction industry: "Marketing Against Resales and Foreclosures"; "When Survival Equals Success"; "Securing Investors and Lenders for Land Development in a Downturn."

A two-year market decline in the nation's major growth areas (Florida, California and the Southwest), coupled with continued softness in other regions, seemed to be taking its toll, or at least taxing the patience of the people at the convention's helm.

As the show was preparing to open, Brian Catalde, president of the home builders' association, said that its political action committee, Build-PAC, decided to cut off its support of congressional candidates until they "adequately addressed the underlying economic issues that would help to stabilize the housing sector and keep the economy moving forward." Last year, Build-PAC disbursed $1.8 million to congressional candidates.

Catalde and others in the housing industry fear recession and say Congress is not doing enough to forestall it. Economists agree that the national housing market will get worse before it gets better.

Today, David Seiders, chief economist for the home builders' group, predicted that "by 2009, the housing sector won't be dragging the economy and actually [will] start supporting it."

Still, Seiders, Frank Nothaft of Freddie Mac, and David Berson of the PMI Group Inc. say they believe that housing starts nationally will drop 22 percent this year after falling 26 percent in 2007, and that single-family sales, which fell 30 percent nationally last year, will be down 27 percent in 2008.

National and regional builders are in big trouble in many locales, with high inventories of unsold homes, acres of expensive land lying undeveloped, fewer contracts for yet-to-be-built homes, and increasing staff layoffs.

These problems, however, are not universal. Custom-home and smaller builders are in better shape, if not thriving, because they have not extended themselves as far.

"It could be better," said Roger G. Wiedenmann Jr. of Wallingford, Conn., who builds 25 homes a year. "It's not as good as it was three years ago, but we had 10 good years in Connecticut. I still think if a builder properly prices his houses for the market, they'll sell."

Russ Begly, national builder-sales manager with tile manufacturer Laufen International Inc., agreed. When his employer decided to move its headquarters from Akron, Ohio, to Miami, Begly's bosses asked him to follow. He put his house in Dresher on the market in July, priced it appropriately, and sold it in less than a month for more than he was asking.

"How we did it was that we agreed to be out in 30 days so the couple could get one of their two children into the Upper Dublin School District," Begly said.

Although there has been a decline in sales for big builders, which typically complete up to 20,000 homes a year, Begly said the gap was being filled by smaller companies, remodelers, and property-management companies doing condo conversions.

"I think smaller builders are doing better," said Glenn Singer of West Chester, Pa., chief executive officer of Builder Partnerships, of Littleton, Colo., which tries to link such firms with manufacturers so they can benefit from discounts the product-makers offer to the big guys.

Singer said his organization represented 70 builders accounting for 22,000 homes.

"The smarter builders saw this coming, so were able to avoid most of the damage by getting rid of excess land a year ago," he said. "What we've been advising builders is to take the cost out of the house, to reduce the number of standard features, and make them options instead."

The builders show is as much trade show as convention, and about 1,800 exhibitors were scheduled to display their wares.

Audrey Reed-Granger, a spokeswoman for Whirlpool Corp., which also owns Maytag, Jenn-Air and KitchenAid, said the company was still finding opportunities. "There's a building slowdown, of course, but people are still remodeling their homes and replacing appliances when they need to be," she said.

Gerald Eid, of Eid-Co builders in Fargo, N.D., said his market (he builds 200 houses a year priced from $109,000 to $167,000) was being sustained by local job growth.

"The market is cyclical," Eid said. "You just have to be ready when bad things happen."