Home Builders' Confident of New 'Boom'

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Home Builders' Confident of New 'Boom'

MBA (1/12/2006) Sorohan, Mike ORLANDO-Despite a now-noticeable drop in home construction and sales, the nation's home builders see solid growth-even a new "boom"-that will sustain supply and demand through the rest of this decade. "There is a very good argument to support that there will be another boom following the current one," said Quincy Johnson III, principal with Quincy Johnson Jones Myott Williams Acevedo, Boca Raton, Fla., speaking at the National Association of Home Builders' International Builders Showhere. This next boom, 2006-2010, will be defined by economic projections, market niches and design, according to panelists. "When it comes to the market, there are a lot of things that people don't recognize," said Lewis Goodkin, president of Goodkin Consulting, Miami. "Will we have a dynamic market? Yes. But will it be a different market than we've experienced in the past? Absolutely." The boom of the next five years will continue to be defined, in part, by what has happened over the past 15 years. The "perfect storm" for housing in recent years, Goodkin said, will give way to a period in which builders will focus on concentrated markets and less speculation. "The next boom will center on fundamentals and demographics," he said. And no bigger demographic "niche market," according to David Clinger, president of David Clinger Associates, Golden, Colo., will be more important than the aging Baby Boomer generation. "As of January 1, there are 78 million Baby Boomers, and 8,000 of them are turning 60 every day," Clinger said. "Appealing to the boomers will be the single-most important factor to home builders." Products aimed at Boomers, Clinger said, include maintenance-free single-family homes for empty nesters. "Boomers are tired of shoveling snow," he said. Standard to such homes, he said, are first-floor master suites and a second bedroom/den/shower with property that requires little in day-to-day chores. "The couples see this house, and the wife looks at the first-floor master suite and falls in love with the place," Clinger said. "The husband sees the second bedroom/den/shower and he falls in love with it." Another trend, Clinger said, is toward mixed-use neighborhoods that promote insulation, rather than isolation-a reflection of a Boomer generation for which being in their 60s means little slowdown in activity. "People no longer want to live in isolated communities-they want to live in insulated communities," Clinger said. "People in their 60s today don't want to be called 'seniors.' They don't want to live in 'adult-only' communities. They don't want to live on golf courses where they sacrifice their privacy." To meet those needs, builders are creating mixed developments that have broader appeal across a number of demographics-families, seniors and empty-nesters. Boomers love the concept of neighborhood and want to remain part of the neighborhood dynamic, with families, retirees and empty-nesters," Clinger said. "This creates opportunities for a number of potential buyers' markets." Boomers have also created a strong second-home market-including the much maligned time-share market, a trend that is likely to continue for years to come. Boomers, Goodkin said, are redefining the second-home market, not only in volume, but intent. "People are looking at their choices and saying, 'why should I put so much investment into a second home when I'm only going to live there for a month a year?'" he said. "They're looking into different arrangements." The big move in second homes, Goodkin said, resembles more of a "rent-to-own" scenario. "The Boomers are buying their second home now as a transitional investment," he said. "They're buying now with the plan to sell their first home and move to the second home." Opportunities also exist over the next several years in areas that don't necessarily have much appeal right now. The key, Goodkin said, is affordability. "People are going to retire to places where they can have a decent standard of living," he said. "That is going to create a lot of opportunities in places that home builders' aren't necessarily looking at right now."