Regional Update (July-September 1998)

Index The State of the States Views From the Region Southeastern Manufacturing Survey Southeastern Economic Indicators

Cover Story - What Is Fueling Atlanta's Housing Growth?

Homebuilder John Wieland Assesses Housing Industry Developments

Gulf of Mexico Oil Companies Gush Over New Drilling Technology

Homebuilder John Wieland Assesses Housing Industry Developments

T o get a perspective on the housing market in the region and the homebuilding industry as a whole, Regional Update recently interviewed John Wieland, one of the Southeast's largest homebuilders and president of John Wieland Homes Inc. In 1994 Wieland was named National Builder of the Year by Professional Builders magazine, and his company received the National Housing Quality Award in 1995. He also serves as deputy chairman of the board of directors of the Federal Reserve Bank of Atlanta.

John Wieland
John Wieland
President, John Wieland
Homes Inc.

QHow does the current cycle of growth in the housing market compare to past growth cycles?

AThis growth cycle has paralleled the economic cycle and is a function of the interest rates being low combined with a strong economy. Nineteen ninety-eight looks to be one of the finest years for residential home building. As the economy has grown, homes have gotten larger and are increasingly more elaborate. Consumers are seeking bigger homes with more interior perks. The current housing boom in the Southeast has been interesting because it is a business that has been easy to get into but fiercely competitive. And that combination of more entrepreneurs competing for business has been positive for homebuyers. While there is some consolidation occurring in the industry, the southeastern housing boom has stimulated the number of builders and, so far, resisted much consolidation.

QHow do governments' attitudes toward development compare among southeastern cities?

AMost of the cities we deal with have become less friendly to developers. Customers and governments expect a better job from developers and have taken steps to slow the development process. On the other hand, developers need to realize that governments have to be respected and seek to comply with the laws and work with people who might be opposed to development.

QHow does Atlanta's single-family housing market compare to other cities in the Southeast (Sixth Federal Reserve District) in terms of growth, potential and economic climate?

AAtlanta is in a class by itself. It has led the nation in housing starts for the last seven to eight years, and there doesn't seem to be an indication that it won't continue.

QHas a recent focus on environmental concerns, such as quality of air and water, affected Atlanta's housing market?

AAtlanta's road issue is an air quality predicament. By making fewer road permits available and denying Atlanta the ability to build more roads, politicians have created a situation where congestion will only increase and people will crowd the roads and pollute the air more.

QIs it more difficult to recruit and retain employees in some cities than in others? How is your company addressing this problem?

AThe building market is tight in most cities. In Atlanta, it is a little more difficult to hire employees because of the strong housing market. Our company is addressing the problem by training. We find good people and then teach them what we want them to know.

QIs it more difficult to obtain materials in some southeastern cities than in others?

AObtaining materials has not been a problem. The Asian (financial) slump has actually reduced demand in the lumber market and taken the pressure off prices because not as much lumber is being exported.

QHow has the housing industry changed in the past 10 years?

AThe industry is more sophisticated and the customer's expectations are higher than they were 10 years ago. Environmental concerns have increased, and the politics and legal proceedings for building homes have become more complicated.

QHow well do you think the needs of lower-income potential homeowners are being met?

ALow-income housing is indeed a problem. Each year we lose lower-tier homes from the housing stock, and these homes are not being replaced. One solution is creating higher-density housing. This splits the infrastructure and land costs. But this solution is often frightening for people in established neighborhoods and homes — Atlanta in particular has a fear of dense housing development. . . . We need to realize that urban planning and housing density are not bad ideas. Perhaps this is an area where the metro area's government could spend more energy to address this problem.