Buy a ranch. Buy it on the Web. But mostly, buy it now, before prices go up.
Those were some of the messages delivered by a group of Chicago’s largest home builders last week at an annual forecasting session.
Their sentiments — about what kinds of houses they will be building, where they will build them and who will buy them — weren’t startlingly different from those of the last couple of years, but a few refinements seemed to emerge:
– The Baby Boomer influence marches on, the builders say. Now that these infamous drivers of the market have developed some familiarity with such huge and influential “age-restricted” communities as Sun City Huntley and Carillon, they’re primed to hear about smaller “in-fill” developments that are also geared to them; look for such subdivisions to start to pop up all over the metropolitan map, the builders said.
And the age-restricted developments (for residents 55 and over) are starting to get competition from a bumper crop of “age-targeted” developments that welcome residents of all generations, yet have amenities that are meant to appeal specifically to older buyers.
– Where in the last couple of years panelists at this gathering talked with fascination about the flow of suburbanites into the city, this time they said they’re watching for something of a switch to occur. They expect a migration of many of those same city-dwellers back to the suburbs now that their kids are of school age.
– Though hardly on that proverbial cutting edge of technology, the building industry is finally getting the drift of how it can help builders sell and build houses. Look for more useful builder Web sites (as opposed to those that just mimic glossy brochures) and for online opportunities to pick out the options and features of your new home and to track its construction. And yes, finally, look for that new home to be wired for technology.
– As for that perennially important subject, prices — well, they’re not going down, the builders say.
“If the economy continues to go strong, prices will continue to have to go up,” explained Patrick Beirne, regional president of Pulte Homes in Hoffman Estates. Adding that he’s not seeing any particular slowdown in sales, he expects housing prices to increase 5 to 6 percent after the first of the year.
On the positive side, slightly, one executive expected some price relief in some areas. “We’ve been seeing 5 to 10 percent increases per year for several years in some pockets,” according to Dan Star, Illinois president of Centex Homes in Schaumburg. “I don’t think we’re going to continue to see prices rising at that level.”
The panelists seemed in universal agreement that today’s well-off customers have such an appetite for new construction that their demand has inflated land costs and sent development ever farther across the metro horizon, just as the sprawl debate heats up.
And as consumer desire for houses has grown, the pool of labor to build them hasn’t, the builders said.
But expensive land and labor aren’t doing all the driving, they said, explaining that consumer tastes are leading the way to bigger, fancier houses.
“These individuals are taking home an extra 5 to 6 percent annually,” in recent years, according to Jim Esperson, division manager for William Ryan Homes in Schaumburg. “They have more disposable income. As a result, the market is shifting the price up.”
Just what that market is asking for in a home appears to be shifting slightly, the builders say. Although the two-story, four-bedroom, 2 1/2-bath home is still amply with us, there’s a growing interest in homes for buyers who don’t fit the two-parent, two-children formula.
These buyers — the single parents, the unrelated adults who are house-sharing, and by far, the aging empty-nesters — are pushing for other kinds of housing (such as townhouses) and for housing that can adapt to their needs.
“There’s a big shift psychographically, with a lot of variations (in types of housing demanded), because we are seeing nontraditional families,” agreed David Branch, Illinois division president of Westfield Home USA in Buffalo Grove.
The perennial shift from smaller house into larger has plenty of variations these days, say the builders, who are seeing moves from larger house to smaller, to townhouses, to condos.
And, to their surprise, they’re seeing a renewed interest in single-story homes, which may be a sign of concerns about aging and reduced mobility. Both Esperson and Richard Brown, chief executive officer of Cambridge Homes in Libertyville, said their companies are hearing requests for ranch plans, though they’re costlier to construct than two-story homes.
Age was a recurrent theme in the discussion. Age-restricted and age-targeted developments “are the focus of a lot of us in the room today,” said Buz Hoffman, president of Lakewood Homes in Hoffman Estates, who said Chicago should expect to see a boom in smaller developments of 50 to 100 units that cater to older buyers.
“Especially in the city,” he says, where building complexes for that age group should do well. “You get your flat with elevator and with amenities.”
At the other end of the age spectrum, watch for s suburban shift, they say. “You’re going to see a group of Baby Boomers moving out to the suburbs,” predicted Brown.
“There’s a movement from folks who bought in the first wave of city housing,” agreed Peter Skelly, division president for Ryland Homes in Schaumburg, who added that besides the schools issue, they’re moving for work reasons.
“Job growth is still the primary factor in new housing, and job growth continues to go out through the major (northwest and southwest) corridors.”
As recently as two years ago at this forecasting session, the participating builders said there was little consumer interest in putting structured wiring in their homes for Internet access and networking of electronic devices. That’s just begun to change.
Pulte, for one, recently announced a national program to wire all of its houses, and Beirne said that the company’s Chicago operation should begin to offer the wiring as standard in February.
Most of the other builders either said that such wiring is standard or an option in their homes.
It’s part of a belated but undeniable shift in a very tradition-bound business: Technology has reared its head, seemingly in several places at once — in marketing homes, scheduling phases of construction, purchasing of supplies and equipment and in the infrastructure of the houses themselves.
“It’s come on us in a rush,” agreed Hoffman, who said that online marketing is becoming more critical in the home-building business. He and others are in the midst of revamping their Web sites to make them more utilitarian.
Builders apparently have good reason to see Internet marketing as giving them a competitive edge. Some of them said that this year they will have attracted 10 to 12 percent of their customers directly from their Web sites.
And even if they don’t start their house hunts online, a large percentage of buyers use the Internet to narrow down their searches, the builders said.
“(Web sites) used to be emotion,” Hoffman said. “They need to have more information and be easier to navigate. If (a consumer) has trouble (using a builder’s page), he’s going to the next site.”
