by David Chapman
Staff Writer
National and local market forecasters recently gave a holiday gift of news akin to coal in a stocking to local builders and industry members, but it shouldn’t be seen as all negative. That lump of coal — the current struggling market — with time and effort should turn into a diamond by showing signs of a turnaround late in 2008.
“The forecast shows a modest rebound in residential construction activity by the third quarter of 2008,” said National Association of Homebuilders Staff Vice President of Economics Bernard Markstein. “If you can come through the next several months, you should come out ahead in the end.”
Markstein was one of three forecasters to speak to more than 90 industry members at the Northeast Florida Builders Association’s recent market seminar “A 2008 Outlook” at the University of North Florida.
Northeast Florida, and Jacksonville in particular, is better off than many other areas across the nation in terms of the strength of the local market, said Markstein.
“Jacksonville has a good economy and that’s a major strength,” he said. “I go to other places and I can’t say the same thing. You guys are good and you beat the rest of Florida.”
The house prices in Northeast Florida, he said, were considered “tame” and Jacksonville is still very affordable. In an opportunity index that looked at nine major cities and a national average, Jacksonville ranked as the most affordable just behind Atlanta. The city was ahead of Chicago, Washington D.C., Boston, Dallas, Orlando and Miami as well as the national average.
The area still has its problems, though, much the same as the rest of the country.
Residential construction is down due to excess inventory that accumulated during slow times and overbuilding.
Markstein said that, unfortunately, Northeast Florida is heavily affected by the oversaturation. He believes reducing the inventory will be the area’s main hurdle to jump before it sees signs of an upturn sometime in early 2009 rather than 2008.
But unlike other parts of the country, he said, Northeast Florida’s population is growing, and combined with a strong economy there should be brighter times ahead. He noted that during his travels to cities, he can usually gauges a crowd’s optimism level and was pleasantly surprised to see the Jacksonville crowd upbeat.
It’s just a matter of time before the consumers follow suit, he said.
“This is the time time to buy and I believe people will start to recognize it,” said Markstein. “Ultimately, people buy a home to live in it, not turn a profit. If you’re in the market and you find a home you like, then during this period I’d ask ‘What are you waiting for?’”
Real estate consultant and local forecaster Charlie Clark was more upbeat in his presentation and viewed the local turnaround a little faster than Markstein.
“We’re heading for a rebound in the second to third quarter with mostly moderate increases back to the 2002 levels,” prognosticated Clark.
In a rundown of the circumstances that brought down the market locally, Clark noted factors including historically low interest rates, a pent-up housing demand met with hybrid mortgages, aggressive lenders, investors and a market where prices increased faster than income.
The path to recovery starts with an attitude adjustment by those in the home building and selling market, a needed change that would remedy the negativity shown by some of the industry, he said.
“If the consumer sees us in a down mood regarding the market, they’ll be in a down mood, too,” said Clark. “Get your attitude right and then you can get your business right.”
Clark’s words of an attitude adjustment were repeated during a third presentation by Bill Webb, author of “Sweet Success In New Home Sales.”
Webb’s animated presentation revolved around how builders can increase their market share and profit margin simultaneously.
“We are not going to build, estimate, account, supervise, drywall or concrete our way out of it,” said Webb. “We’re going to have to market our way out of it because it’s the only path to salvation.”
Webb touched on Clark’s call for an attitude change and expanded it, stating that the consumer feeds off builder’s and the media’s attitudes toward the market and chooses to wait to buy because they believe it is to their advantage.
“There are people out there buying houses,” said Webb. “Go out there and reach them. Expect to do business.”
Ultimately, Markstein said, it will take time for the market to correct itself, but people in Northeast Florida should feel lucky. The news and forecasts he presents to others across the country, he said, is usually more grim and severe.
“Anytime you feel bad about the situation, look at other places,” said Markstein. “We just have to continue in 2008 to sled through this.”