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At Southeast Building Conference, builders hang hopes on boomers

ORLANDO — There weren't a lot of happy faces around the Orange County Convention Center last weekend for the Southeast Building Conference, the annual summer gathering of the home building industry from 10 Southeastern states.

Why would there be, with new-home sales in free fall in some areas and builders wondering which company would be the next to falter?

The quick answer to that was WCI Communities of Bonita Springs, which filed for bankruptcy Monday morning. But that's another story.

"We're nine months from bottoming out," said Brad Hunter, national director of consulting for MetroStudy, which tracks the new-home market.

Pent-up demand will stay pent up, he said, as long as potential buyers fear buying in a declining market, can't sell their existing homes and can't get a mortgage.

Newly toughened lending standards mean the rise of what he called "GI financing — generous in-laws." And he spoke about the "cash for keys" phenomenon: Bankers give a homeowner who's way behind on the mortgage $500 to turn over the keys and get out.

The key leading indicator to watch, Hunter said: a manageable supply of homes for sale. When that supply exceeds what buyers will purchase (the technical term: "the absorption rate") in 2 1/2 months, we're in trouble.

If you need the quick tutorial on how we got into this mess over the last few years, here it is, from Bob Schultz, a new-home sales specialist: low interest rates, free money, lots of baby boomers who wanted to buy, demand exceeding supply, indiscriminate price increases, huge numbers of flippers/investors, an unexpected demand from immigrant buyers, and a wired society that discovered lots of people could work far away from their offices, which motivated them to buy second homes and spend more time there.

Seeking to soothe his audience, Schultz assured them, "This too shall pass," and "The market is what it is."

Not to be outdone, Hunter offered this comforting thought: "By the end of December, the year will be over."

The builders offered a seminar on "Mythbusters: Getting the Real Story to the Media, the Lenders and the Public," in which they intended to discuss "the positive message that now is a good time to buy a home." But they closed that session to the press. So much for getting the real story out.

There were plenty of workshops on over-50 buyers, the "active adult" market to whom the builders seem to be looking as the saviors of this market. Those are the baby boomers, 72-million strong, who have just started retiring. The hope is that they'll buy downsized homes, or second homes, or retirement homes, or something. Anything.

Some of those buyers are looking for what Orlando architect Don Evans calls "boomer jewel boxes" — smaller homes with great details.

They're buyers who are "not restricted by work or schools" — they can live wherever they want, said Jacksonville architect Paul Basham. "They need access to an airport, public transportation, retail and a college, all within an hour's radius," he said. They want to be near nature, recreation, culture and sports.

And the ads for those communities had better feature people at least 10 to 15 years younger than the target audience, Basham said: "That's how they see themselves."

They don't think of themselves as part of the AARP generation. They're the ones wearing hearing aids that look like hip Bluetooth phone headsets.

Judy Stark can be reached at jstark@sptimes.com or (727) 893-8446.

At Southeast Building Conference, builders hang hopes on boomers 08/08/08 [Last modified: Friday, August 8, 2008 4:30am]

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