Home Builder Wieland Upbeat Amid Housing Downturn
After suspending construction plans on his $350 million luxury condominium project in November and laying off 59 company employees in a streamlining move prompted by slow home sales, Atlanta home builder John Wieland said he’s more “upbeat” about his business now. “The end of last year was the most miserable time of my life,” Wieland said. But a new promotion offering price discounts up to $100,000 and a lifetime structural warranty on Wieland houses produced 80 sales for the company between Jan. 25 and Feb. 3, twice the number of homes the company sold in the same period last year, according to Wieland officials. That provided a welcome cash infusion of $50 million for the home builder, which is currently marketing 30 communities with more than 400 unsold homes around the metro area. And the surge in cash flow has recharged Wieland’s confidence that his company can withstand the anemic sales expected to continue through the rest of 2008. The company founder said the “Sale of a Lifetime” promotion was conceived to help coax reluctant buyers into making a purchase. “It takes more visits these days to get people to make a buying decision than it did a year ago,” he said. Currently, he said, Wieland buyers are averaging 71 days between first contact and purchase commitment, up 29% from the 55-day average a year ago. Over the past year, Wieland has trimmed its backlog of unsold homes and hired a new vice president for marketing to devise new strategies for attracting buyers in the city’s overbuilt market, which has an 11-month unsold inventory. (www.ajc.com)
Atlanta Journal-Constitution (2/6/08); Julie B. Hairston
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Toll Founder Maintains Bleak Housing Outlook
Robert Toll, outspoken founder of U.S. luxury builder Toll Brothers, said on Feb. 6 that “the housing market remains very weak in most areas. Based on current traffic and deposits, we are not yet seeing much light at the end of the tunnel.” He added: “Based on demographics, improved affordability and interest rates near historic lows, customers should be attracted to the abundance of standing inventory at the aggressively low prices being offered by builders. However, buyers seem to be hiding. We think that the market’s problem is a lack of confidence, not just regarding the direction of home prices, but, more broadly, in the direction of the overall economy and the state of the nation.” The average price of Toll homes for which a contract was signed in its first business quarter was down 13% to $634,000 as home buyers cancelled more expensive home purchases. Toll also said it had cut the number of lots which it either owned or optioned by 38% to 57,000. The company expects to take between $150 to $300 million in write-downs on landholdings in the quarter. (www.ft.com)
Financial Times (2/6/08); Daniel Pimlott
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Area’s Hottest Zip Codes Defy Slumping Market
Tucked within data showing that Ohio ranks sixth among all 50 states for foreclosure filings are indications that some hot neighborhoods are surviving the setbacks. In several local markets sellers are getting an average 95% to 97% of their asking price and homes are staying on the market between an average of 70 and 102 days. “With the rates dropping and the way the economy is right now, we thought we should start looking and see what’s affordable and where,” said new home buyer Jay Valadez. Jay and his family are moving into a brand new house in Amherst and are paying almost $145,000 for what would have cost $175,000 before the housing market bottomed out. Valadez said the schools are good, there’s a lake and a marina just five minutes up the road, there’s a pool and the price was hard to beat. Southeast in the city of Hudson, the houses in the $250,000 to $500,000 price range are still selling steadily. Hudson tops the price bracket with sellers getting almost 96% of their asking price, on average. (www.newsnet5.com)
NewsNet5.com (2/6/08)
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What Housing Crisis? Why the Mortgage Mess Hasn’t Hit the Luxury Market, Yet
Prices on ultrahigh-end homes are still rising, with some reaching an astronomical $175 million. It’s simply a matter of supply and demand, according to brokers from hot markets like Manhattan, the Hamptons, Palm Beach and both ends of California. While there’s a national glut of McMansions in the $500,000 and up range, there’s a shortage of trophy properties on the market and an increasing number of wealthy foreign buyers from Asia and Europe looking to capitalize on the weak U.S. dollar. According to market data from DataQuick, sales for homes costing $5 million and above climbed 31% in the first quarter of 2007 compared to the same quarter of 2006. Sales of Manhattan apartments costing $10 million or more tripled in 2007, according to the real-estate company Prudential Douglas Elliman. “The rich are even richer than ever before and the very wealthy are pouring more money into residential real estate,” says Laurie Moore-Moore, the founder of the Dallas-based Institute for Luxury Home Marketing, a membership and training group for luxury-real-estate agents. While Europeans have always invested in American properties, Moore-Moore says new buyers are increasingly from Brazil, Russia, India and China. (www.newsweek.como)
Newsweek (1/30/08)
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Builders Cater to Larger Latino Families
While some home builders in California have marketed to Latinos for two decades, there is an increased emphasis now because of the housing market downturn and because Latinos continue to be underrepresented as home buyers despite making up a larger percentage of the population than they used to. California builders started studying the Latino market during economic and housing downturns in the early- to mid-1990s, said Steve Johnson, a director of MetroStudy, a national housing market research firm. It wasn’t until about 2000, when the economy and housing market started to rebound, that builders implemented changes to appeal to Latinos, Johnson said. These included adding more backyard gathering areas with pools and barbecues, and eliminating the formal living room in favor of a larger family room. Builders have also added more bedrooms and bathrooms and increased the size of garages in response to Census data showing that Latinos average nearly four people per household, compared to the national average of about three, he said. They hired more agents who speak both English and Spanish, started creating brochures and billboards in both languages and added photos of people that reflect diversity, Johnson said. (www.scrippsnews.com)
ScrippsNews (2/6/08); Sean Nealon, Press-Enterprise national western news
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From the Housing Market to the Maternity Ward
Recent data from the National Center for Health Statistics showing that for the first time in 35 years the number of children an American woman will have in her lifetime reached 2.1, the theoretical level required to maintain the country’s population, has raised discussion of the relationship between fertility and real estate. In the wide-open mortgage climate early this decade, creative loan products allowed more people than ever to buy homes, often a precursor to having children. In 2006, the babies arrived — a reminder, perhaps, that if you build it, they will toddle. Matthew E. Kahn, an economist at the Institute of the Environment at the University of California, Los Angeles, suggested a relationship between the increasing size of U.S. houses even as family size declined. Bigger homes mean incentives to stay home and fructify, Kahn said. “Those ARM-financed McMansions are in the middle of nowhere, where land is cheap,” he said. “That increases the time it takes to get to work, meaning it raises the cost for women to go to work. That should increase fertility.” The recent downturn in the economy and the housing market bodes poorly for a continued baby boomlet. Last year, NAHB reported that houses had stopped growing, and foreclosures discourage people from having children. “What could be happening now is that people will have wealth shock, and reduce their need for everything, including children,” said Seth Sanders, director of the Maryland Population Research Center at the University of Maryland. (www.nytimes.com)
New York Times (2/1/08); John Leland
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