CHANTILLY, VA. —When Ivy Zelman, the polished and bearish housing industry analyst from Zelman & Associates, finished her outlook presentation at the 2008 ProDealer Industry Summit in Chantilly, Va., a question rang out from the back of the packed conference room.
“My daughter turns eight next week,” came the voice. “Do you do birthday parties?”
It was a light-hearted moment to break the tension built up over 45 minutes of charts and graphs generally heading in the wrong directions.
Just outside of Washington, D.C., and against the back drop of financial uncertainty and Congress’ push to rescue the credit markets in the wake of the Lehman Brothers bankruptcy, the marquee session of the conference offered sobering analysis of housing trends.
Fortunately, not all the views emanating from the two-part economic outlook session were negative. Economist Paul Jannke, senior vp-wood and timber information for RISI, presented a power point with the relatively uplifting title: “North America Housing Markets: Not All the News is Bad.” His optimistic message included growing afford ability of housing and pent up demand for housing. Still, he cautioned: “It will get worse before it gets better.”
Not all of the educational sessions at the summit focused on the economy. Sam Rashkin described the growth of the Energy Star for Home program. A panel discussion on supply chain improvements shared industry research and details of a partnership between Pro Build Holdings and Beazer Homes. And Huntington, N.Y.-based pro dealer Diana Perenza shared best practices on running a tight credit operation and avoiding losses. She shared the stage with bankruptcy lawyer Annie Catmull.
But it was the economy that was front and center during the summit’s day of educational sessions.
Chief enemy of a housing rebound, according to Zelman’s presentation, is foreclosures. She said there are 800,000 to 1 million foreclosures owned by institutions today. Furthermore, almost 10 million people in America today have zero to negative equity in their homes, she said.
A recent trend affecting the market is cancellations caused by appraisal shock. She said builders are increasingly running up against appraisals that are 5 percent to 10 percent below the contract price, swelling the cancellation rates.
“What we need to do is stop the foreclosures from comin