by David Chapman
Staff Writer
Tough questions were asked and blunt answers were given during September’s Sales and Marketing Council breakfast at the University of North Florida’s University Center.
Greg Matovina of Matovina & Company was the moderator for the event with panelists Andy Chambers of Engle Homes, Mitch Montgomery of Montgomery Land Company, Walt O’Shea of Hines, Bill Cellar of Providence Homes and Dennis Ginder of Mercedes Homes taking tough questions about the market and giving their answers.
Some questions and responses:
Q: “What are big impacts that are affecting sales?”
A: “Interest rates, the credit crunch, there’s a lot of factors involved,” said Montgomery. “Speculative building is a key concern.”
A: “Consumer confidence is low and still declining,” said O’Shea. “I believe that’s the key to getting the discretionary buyer off the fence.”
Q: “Are resales considered competition?”
A: “If you look at the MLS (Multiple Listing Service), the equilibrium for Northeast Florida is about 5,000 to 6,000. It started getting higher and at one point reached 12,000 in 2006. So yes,” said Ginder, who then added, “Ever been to the Cheesecake Factory? I can’t eat there.. there are too many choices. Homebuyers, I believe, are the same way when you have an overflow of inventory.”
Q: “On the cost side: what are you seeing in land cost? Are lot prices down?”
A: “It’s a double-edged sword,” said Chambers. “Prices do go down, but so does volume. We’ve got to be careful as builders not to put people out of business.”
A: “Land has dropped whether we want to admit it or not,” said Cellar.
Q: “If you had to do it over again...What would you have done differently in 2004 and 2005?”
A: “Didn’t react quick enough,” said Montgomery. “I would have gone with my gut instead of putting it off.”
A: “Time is the death knell for our business,” said O’Shea. “We had condominiums in the $200s and $300s that were hot sells. With the success of those, we went a little bit higher with the rest. In retrospect, we should have stayed on the original plan.”
A: “It’s tough to say,” said Ginder. “If you pulled off the gas too early you’ll get passed. We were happy about sales in 2005 and kept building that spring. I guess we should have paid more attention to the numbers. But then again, we’d still be swinging for the fences.”
A: Cellar: “I guess obviously if I had a crystal ball we wouldn’t have bought so much land and did more to sell out (what we had).”
A: “We had to do what we did or we’d be dealing with a backlog of inventory today from 2004,” said Chambers. “We did make mistakes, like land buying. We needed to just use more common sense.”