Caution is the watchword this weekend as the National Association of Home Builders holds its 47th annual convention in Atlanta, in an atmosphere of war anxiety and continuing bleak economic news.
”The events in the Persian Gulf have drawn a somber mood over the convention, but life goes on,” said outgoing NAHB president Martin Perlman.
Builders in many areas of the country already had good reason to be in a somber mood. Perlman noted that the 1.2 million housing starts recorded in 1990 was the lowest total since 1982, and pointed out that housing starts in December were 12.4 percent below November`s level.
Perlman said 1990 had been ”tough, frustrating and troubled,” and added that there will be ”tough months ahead in 1991.”
He predicted that starts will fall significantly again this year, to 1 million. An upturn should be expected about midyear, he said, though the outbreak of war clouds the picture.
Perlman, a Houston builder, and other builders in attendance expressed some hope that a quick U.S. victory in the gulf might well have a favorable impact on the industry.
”The oil that drives our business is consumer confidence,” said Perlman. ”If this war ends quickly, consumer confidence could rebound quickly thereafter.”
L.J. Schwartzee of Omaha, executive director of the Nebraska Home Builders Association, said uncertainty over the gulf situation had been significant in making consumers postpone buying decisions, but ”that has changed in the last few days.”
Pat Neal, a Bradenton, Fla., home builder, agreed. ”At least we can see the opening of a resolution and maybe people will start making buying decisions again,” he said.
But Perlman warned that a drawn-out war could deal a severe blow to an already troubled industry. ”Logic would say that a long-term war would cause significant inflation and higher interest rates, which could have a detrimental effect on housing,” he said.
Right from the opening ceremonies, it was clear this convention would be overshadowed by events in the Middle East. A public announcement was made before the kickoff at the Omni Stadium reminding those in attendance that the fireworks that were part of the ceremonies were a convention tradition, not related to the situation in the gulf.
U.S. Secretary of Defense Dick Cheney, scheduled to be the keynote speaker, was a no-show, for obvious reasons.
”We understand why,” said Perlman, before asking the crowd of more than 5,000 builders to join in a moment of ”silence and prayer for the men and women in the Persian Gulf and world peace.”
Association officials said they expected convention attendance to be down as much as 5 percent from last year`s show in Atlanta, which drew more than 60,000.
Those in attendance Friday were distracted by continuing war news.
”I`m glad to see you all here and away from the television,” said Carole Eichen, a Santa Ana, Calif., interior designer, opening a seminar for builders on marketing affordable housing.
One key to the convention`s tone was that many of the more than 150 educational sessions were devoted to helping builders survive in a depressed market, including retooling to produce more affordable homes.
Perlman said he didn`t know how many builders had gone out of business in 1990, but added that the four weeks before Christmas were the hardest period he had had as association president because of the number of builders who called him for help, mostly because they couldn`t get funding for projects in the current restrictive lending environment.
He said he had scored some small victories in his year-long lobbying mission to ease restrictions on lending for land acquisition, development and construction. The credit crunch, however, remains the builders` key problem, he said-stifling projects even in areas where housing demand is strong.
He said he told President Bush in a recent meeting, ”`Home builders across this country are among the most patriotic people in this world … but we need your leadership on domestic as well as foreign policy.`
”The message of the credit crunch and its drag on the economy is finally getting through to the administration,” Perlman said.
