Nailing down the answers Roundtable: Four representatives of the homebuilding industry provide a generally upbeat assessment of where their business is.

December 28, 1997|By Robert Nusgart | Robert Nusgart,SUN REAL ESTATE EDITOR

They came together to discuss their industry, defend it and describe how they are going to make the Home Builders Association of Maryland a more visible organization.

At a roundtable discussion, set in a condominium development in the White Marsh development area, were John Bowers of Nottingham Properties, 1997 HBAM president; Howard Saslow of Encore Homes, 1998 HBAM president; Jonathan Mayers of Macks Homes, president of HBAM's Land Development Council; and John Kortecamp, executive vice president of HBAM.

In a 90-minute question-and-answer session, they reflected on struggling new-home sales in the Baltimore metropolitan area, land management, their industry's reputation, what customers can do to avoid disasters, and their perception of and consequence of the state's Smart Growth initiative.

QUESTION: According to Housing Data Reports, which tracks and analyzes new home sales in the Baltimore metropolitan area, 1997 has come in below expectations. What has been your assessment of the market this year?

Saslow: From my perspective as a small builder, where I build that's the farthest thing from the truth. Obviously you have to go with the report, and the report is going to be more or less honest. But where I am building in Howard County, it is going gangbusters. It is pent-up demand. People are feeling better with the economy. I think probably some of the slowdown has certainly been in Carroll County they are 33 percent off, and I think you are seeing some of the growth controls that are in place. But in counties like Howard County, I don't think that is true at all.

Kortecamp: Anne Arundel also did fairly well.

Mayers: But Frederick I believe is off, Baltimore County is off, Harford is off. Carroll is drastically off.

Bowers: It's a combination of local economy and demographics. [It is] changing, and the buyer market is changing, [so] we are starting to see an increase in our population age, and the first-time homebuyer market segment is not as heavy as it has been in the past, so there is a thinner pool of buyers to draw from. And, since we are not having a great inward migration of residents, what growth that we are seeing is really localized.

What is the general feeling out there in the new home business?

Saslow: Every single contractor that I talk to is busy beyond belief. Again I am fairly localized, but my contractors are working seven days a week, unlimited overtime, in order to keep up to demand. But if you really look at it, like we said, Carroll County in the last two years, if not longer, has been a very tenuous place to be building. You could not count on getting lots, people were scared to commit to develop land. Nobody is going to write a contract to purchase land if they don't think they will be able to get permits. I believe, in Harford County, similar growth controls were issued. You are going to see the impact of that, and let's face it, that's what they [government officials] want you to see.

Mayers: I think, nationally, building is up, but in this area it really isn't. And in this area it has slowed tremendously in a large portion [because of] our economy.

Saslow: The fact of the matter is we cannot in this region sustain the incredible growth in this industry [construction] that we had back in the 1980s. We are already running out of land in Howard County, Anne Arundel County, all the major areas where people want to live to be close to commuting. We are running out of land quickly. And if we sustain the growth that we had back in the '80s, everything would just implode upon itself.

One of HDR's observations for slow sales is that there is too much product on the market. Is the Baltimore metropolitan area -- especially Harford County -- saturated?

Bowers: I think there is more product available than buyers. There's a lot more choice. But it goes back to the overall economic issue there is a limited pool of buyers, but they have a lot to choose from. So the competition is very, very difficult on the builders' side because there is so much product.

Kortecamp: One of the problems is the overall housing economy. You'd say it's overheated, and there's too much stock. But if you look at the subdivisional market, that's not the case. The custom homes, the homes in a certain price range or homes in certain locations, the market is very strong. So it's not across the market in total. Columbia is a classic example.

Saslow: Columbia continues to attract the upwardly mobile and the people who can spend a little bit more. For a long time, the market for $300,000 houses was dead. You could build $220,000 to $250,000, and you were fine. Now all of a sudden people are looking to spend $300,000, $400,000, $500,000 for a house, and the lots on the market, which weren't there a year or two ago, are going to affect the market.

What words would you use to describe the buyer in the marketplace right now? And what are buyers expecting out of builders?

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