Jerry Konter is no stranger to difficult market conditions.
As CEO of Savannah, Georgia’s Konter Quality Homes, he’s lived through four housing crises (some worse than others). And now as the newly installed chairman of the NAHB, he’s charged with negotiating the industry’s safe passage through a year of higher interest rates, crimped supply chains, and rapidly escalating prices.
“I believe there is strong pent-up demand and a long runway for builders to be successful in their businesses,” he said. “The negative on the business side is that all the headwinds aren’t going to go away next quarter. They are going to be much more embedded into what we are dealing with as an industry for a much longer time than we anticipated would be the case.”
BUILDER caught up with him to find out more about his priorities for the coming year.
BUILDER: You’re at the International Builders’ Show right now. What’s the mood?
Konter: I know some exhibitors are surprised by the size of the crowd. I think the entire trade show industry is looking at this to see if we can pull this off in the environment that we are in. I think we can—we gained a lot of experience last year when we had to cancel. This may end up being a better experience for some exhibitors with fewer competitors—it’s not so crowded that you can’t have a conversation with potential customers.
BUILDER: What do you want to get done in 2022?
Konter: The challenges we face are multiyear, but, most importantly, it’s about the headwinds and the changing environment for building a house. There are supply chain issues. Buyers are changing their expectations of what they need and want in a house because of the way their lives have changed. There are just tons of challenges in front of us, and builders need to figure them out and adapt. Internally, one thing I am concentrating on is rebuilding a membership culture so we can help locals be more sustainable and more effective in their mission.
BUILDER: So about those supply chain problems. How big of an issue are we talking?
Konter: It’s a huge deal. Sometimes it feels almost insurmountable. Let me give you a personal example. I’ve been waiting 34 weeks for windows, and I still don’t have them all. We had those windows negotiated before we ever started construction. I can’t wire or move forward with electrical until we get everything closed up. That can be disastrous for us to meet a construction schedule. And then you end up doing carpet before paint because the paint company ran out of paint. Every week it’s a different supply chain issue, there’s no possibility of guaranteeing an accurate delivery date. It’s a moving target.
BUILDER: What are you going to do about that as an advocacy organization?
Konter: We’re advocating to the current administration and our congressional friends. I don’t want to get into the weeds, but the Federal Reserve can do all kinds of things that might be helpful. We’re putting a focus on policymakers and helping them to understand it’s a crisis and it can’t just be about keeping price points elevated and inventories limited.
BUILDER: Are you worried about what it’s doing to affordability?
Konter: It’s already affected prices. I’ll give you another example of how we decided to sell a model home. Last time we sold a model home the way it was equipped, it sold for $310,000. We looked at the market to see what was being sold that was comparable, and we priced it up to $345,000. Within eight hours it had seven offers that were more than the asking price, and it ultimately sold for $372,000. That’s where the market is right now.
BUILDER: Is that sustainable?
Konter: I don’t envision it changing without a total crash of the market. And it’s my opinion that there is too much pent-up demand for that to happen. I don’t think you’ll see great reductions in the price of housing because of passed on costs both from the supply chain and the manufacturers. It goes far beyond lumber now, although lumber is still the single largest input as a percentage of rising costs.
BUILDER: Let’s end on a high note. What’s the good news for 2022?
Konter: In the grand scheme, I believe housing has a real future. I truly believe what we do creates social change and that this is a noble industry. We change people’s lives, and I’ve seen that firsthand.
