Reporter’s Notebook: IBS

Orlando, Fla. — Most attendees just made passing mention to the thinner crowds and smaller booths this year at the International Builders’ Show. It’s like commenting on how cold it is when there’s snow falling from the sky. Regular exhibitors that opted out from the show were Home Depot, Masco, Andersen Windows, Atrium and Weather Shield.

Also missing in action were the girls in orange hot pants and white T-shirts giving out trinkets. Fewer carnival barkers were running games. It made for a more tranquil environment, with even the power tool demos a little quieter this year. Trying to network over that din is difficult and risky, because you never know at what part of your conversation the circular saw will cut off.

Another noticeable difference between 2011 and 2012: The liquor started sooner and in more places than ever before. I didn’t see a single espresso bar, but by 2 p.m., I saw my first open bar on the show floor and by 4 p.m., every other aisle had at least one.

Foot traffic was neither heavy nor light. You could move about the aisles fairly well, but the hall never seemed like a ghost town. I’ve been to trade shows last year that were small enough to do in one day. This was not one of them.

Insulation in its various manifestations was everywhere in 2011, but solar made a big splash in 2012. Larger manufacturers like CertainTeed and Dow that have been showing prototypes of solar roofing panels are clearly ready to go to market; now the smaller, innovative vendors are bringing on products that can also generate electricity through the sun’s rays. Anywhere Solar, a San Diego-based firm, displayed strips of solar lights that can be screwed in (and clipped together) on shutters, railings, fascia boards, RVs — you name it. “Solar wherever you think of it,” said company director Bennet Newman.

Over at the Lumber Liquidators booth, an aging white rapper divided the generations into two camps as Vanilla Ice made a scheduled appearance to sign autographs and pose for pictures. Not everyone knew who he was, and more than one person referred to him as “Ice T,” but the television host of “The Vanilla Ice Project,” where he renovates a house in Palm Beach on the DIY Network, clearly still has a following.

On a more sober note, the usual lineup of housing forecasters was not completely glum this year. Ed Sullivan, chief economist of the Portland Cement Association, was (as expected) the most cautious of the lot, predicting 443,000 new single-family housing starts in 2012. That’s a 3% increase from 2011.

“Banking processing delays that are pushing foreclosures into 2012 and maybe into 2013” are dragging down the housing recovery, Sullivan said. Multi-family construction is on a roll however; a 55% increase in 2011, Sullivan estimated, and double-digit increases over the next two years.

David Crowe, chief economist for the National Association of Home Builders (NAHB), which sponsors the IBS event, predicted a possible 16% increase in single-family housing starts.

“I’m not saying we’re going to have a banner year; I’m saying we’re going to have a better year,” Crowe told a crowded conference room of builders and vendors. Single-family starts are forecast to reach 499,000 in 2012, compared with the record low of 429,000 in 2011. One year later, the NAHB forecasts 660,000 single-family starts.

When it came to multi-family, Crowe subtitled his press conference, “How long can the good times last?” An estimated 208,000 multi-famiy units will be constructed in 2012, according to NAHB estimates. Even the condo has shown some promise in terms of expectations for the future, Crowe said.

Joining Crowe was Ron Witten of Witten Advisors, who provides market advisory services to major apartment developers. He debunked the theory that foreclosures have forced people into apartment units, thus boosting demand.

“The growth [in occupancy rates] has not come from a flight from foreclosed homes but the arrival of this echo boom generation and their ability to get jobs. Most of the growth we’ve [already] seen went to single-family rental homes,” Witten said.

Witten later appeared on a multi-family housing panel that discussed the shortfall seen in supply meeting demand over the next few years.

“Capital is limited in this current market, and developers are having a difficult time obtaining the credit needed to finance the development of new apartments,” said developer W. Dean Henry, president of Legacy Partners Residential in Foster City, Calif.

A panel of remodelers pointed to three trends to watch in 2012: aging in place, energy retrofits and reinvesting in distressed properties. Spending on improvements to owner-occupied housing is nearly equal to that of new residential construction, said Paul Emrath, NAHB’s VP survey and housing policy research. The official prediction: Residential remodeling will rise 8.9% in 2012. Look for stronger growth in the second half of the year.

Casting farther into the future, a panel of green building experts talked about 2015 and beyond. Green “appraisals” may become the norm, they said, and it won’t be long before homes start to get appraisal credits for green features. Building products are already appearing with Environmental Product Declaration or Environmental Facts boxes. (Picture those nutritional content boxes on food, but replace protein, fat and fiber with recycled content, energy consumed during production and so on.)

Jennifer Languell, president of Trifecta Construction Solutions, noted that large corporations — IBM, Best Buy and Johnson & Johnson, for example — are looking for ways “to get into the green space.” But it would be a mistake to only chase the high-end, green-building dollars. Her firm has recently done two affordable housing projects that were LEED-certified, she said, and the U.S. Green Building Council does a high percentage of LEED projects with the federal government.

The Fed, as the Federal Reserve System likes to call itself, signaled its concern over the housing market by sending none other than chairman Ben Bernanke to address attendees on the last day. The line to get into Bernanke’s speech started 90 minutes ahead of his address, which drew heavily on a white paper on the U.S. housing market submitted to Congress in January.

Bernanke made it clear that he doesn’t think that historically low interest rates are going to fix the problem. In fact, he was obviously worried about the overall effect of the housing crisis on the recovery of the overall U.S. economy.

“One of the effects of the decline in housing worth is to reduce the ability and willingness of households to spend,” Bernanke said. Underwater borrowers may have trouble paying for emergency health expenses, financing their children’s educations, or moving to a new location for a job opportunity because they can’t sell their current house, he pointed out.

Although Bernanke acknowledged that lax lending standards helped precipitate the housing meltdown, now “the pendulum has probably swung too far in the other direction.” Current lending practices have been denying mortgages to creditworthy houses, he said.

Vacant and foreclosed homes continue to exert downward pressure on the market, according to Bernanke, who outlined several proposals to get these homes off the market, such as converting them into rentals or turning them over to non-profit “land banks.”

Bernanke’s staff is also communicating to the banks that now is a bad time to act miserly, he said.

“As regulators, we have been very clear to the banks that we do not want them to turn away creditworthy borrowers, and that includes home builders,” Bernanke said.

In a question-and-answer session with the audience, Bernanke was asked what he, as Federal Chairman, could do to move forward on his ideas to fix the housing market. The answer: Congress, the FHA and other government agencies will have to implement (or not) the proposals he has put forth.

“Our goal was to put out there some main issues for people who have to make these decisions, and to make people realize how central to the economy housing is,” Bernanke said.