May 29th, 2007 4:55 PM by Karyn Smith
Steve O'Dowd, 53, president of Engineered Homes of Orlando Inc., an employee-owned production home-building company based in Winter Park. O'Dowd spoke with staff writer Jerry W. Jackson.Question: Late last year, you were fairly confident about local home building for 2007. Has the extent of the slowdown surprised you?
Answer: I'm still very confident in what I see happening in the marketplace. What really surprised me more were the amount of people who canceled contracts. It appears the amount of sales we expected to take place continued to run the way we expected. But we had higher cancellation rates.Q: What about your 2006 sales, and how is it going so far in 2007?.A: Our 2006 sales ended up slightly below our original projection cast at the end of 2005. [Sales of 274 homes totaling $102.7 million last year versus 261 homes totaling $103.9 million in 2005.] The company entered 2007 with about 250 homes in backlog, which was very strong for a company of our size. In 2007, for January and February, we saw strong sales -- about 30 to 35 a month. The beginning of March we saw a bit of a slowdown, then the end of March things picked back up.Q: What about the national market and how that factors into Central Florida's housing picture?A: There's a direct effect on Central Florida, and one of the immediate effects is the ability of people who live outside the area to be able to sell their homes. There's still a willingness to come down -- we still have traffic coming through the doors -- but we hear more and more they have to sell the [other] house [first].Q: Housing affordability has become more of a serious issue. Yet prices don't seem to be falling much, and wages aren't closing the gap. What are your thoughts?A: Between the banking industry and the home-building industry, we have to somehow be able to get together and figure out a way to get people into homes without breaking their backs either by requiring hefty down payments or back-breaking monthly payments.Q: But lending standards have recently tightened, and first-time buyers are the ones who have the hardest time qualifying. Is the pipeline for new homeowners drying up?A: I would say the pipeline at the entry level isn't drying up -- there's still a want. But there's no means for them to get [a home], so they are forced into renting.Q: Are new-home prices going to continue to drop as a result of discount deals?A: I think you'll continue to see some discounting on houses that are in standing inventory. I think you'll see that from builders as well as resellers. But I really believe we are in the trough, at the low point right now, and as the economy picks up this spring and summer, when home buyers typically come into town, I think you'll see prices inch back up. So now is the time to buy.Q: Most home builders have laid off staff and made other cuts. What are the chances that residential builders will start competing again with the commercial sector for employees?A: I think the layoffs that we experienced were the result of production demands. ? If we go back 10 years and take a look at Central Florida, you would be hard pressed to find someone doing more than 500 homes a year, [yet] by 2004 and 2005, builders were into the thousands and even 2,000s. So as quickly as they were able to grow, they fell just as quickly as production demands fell. So I really believe we saw the result of a cycle. Fortunately, we saw a lot of people were able to go and find work in the commercial sector.