BASF president examines changing marketplace: BASF News recently interviewed Rick Horton, the 2005 president of the Builders Association of South Florida

South Florida CEO, Dec, 2004 by Richard Westlund

BASF News: What are your priorities for the year?

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Horton: My biggest goal for the year is creating a greater awareness of the Builders Association of South Florida in the community. The construction industry is South Florida's second largest employer behind tourism. Therefore, our BASF members have a major impact on the health of our economy. We offer a great many services for our members, and I would like the homebuyer and the renter to know more about BASF and its role in the community.

A second priority is continuing to represent all builders in South Florida when it comes to governmental issues that make construction more difficult. The BASF is at the forefront of land, zoning and environmental issues, and we work closely with other associations to participate in the legislative and regulatory decision-making process.

A third goal is to remain actively involved in local organizations, such as Habitat for Humanity. In 2004, we made a three-year commitment to build a Habitat house each year. We will continue that commitment, making a housing contribution to our community while getting our members involved in a worthy project.

BASF News: How is the South Florida marketplace changing?

Horton: Because South Florida is running out of ground, we are seeing far more infill projects. Builders are knocking down old buildings, rebuilding them from the inside or remodeling them to suit today's market. The lack of raw land has also spurred the high-rise condominium and rental markets, and there are now more than 180 high-rise projects under construction in our region.

BASF News: Are there any areas where the single-family home market remains strong?

Horton: Yes. Activity is strong in the Homestead area, which I call the new frontier. Currently, there are 12,000 homes under construction with another 20,000 homes in the pipeline. There are also many new business ventures and commercial structures underway in southern Miami-Dade.

BASF News: What about development in Broward?

Horton: Several years ago, western Broward was the new frontier. Now, that area has become built-out and land is more difficult to find. We are now seeing the same types of infill development in both Broward and Dade; both markets face similar opportunities and restraints.

BASF News: And development in the Keys?

Horton: Residential and commercial development in the Keys is occurring at a much slower pace. Our builders who are active in Monroe County understand the local issues and how to cope with them.

BASF News: How does BASF reflect these broad changes in the South Florida market?

Horton: Our membership is returning to a more balanced 50-50 relationship between builders and associates, who include mortgage lenders, bankers, suppliers, and other professionals related to our industry. We are attracting more commercial builders, as well as contractors who specialize in remodeling and renovating existing structures.

BASF News: What do you offer the smaller contractors?

Horton: In the last two years, it has been very difficult for small contractors to obtain liability insurance. Recognizing the problem, the Florida Home Builders Association (FHBA) formed the Florida Home Builders Insurance Agency (FHBIA), which can offer liability insurance to small contractors through BASF at a much better rate. That has been very appealing to general contractors and subcontractors.

BASF News: Is BASF putting a greater emphasis on the infill and condominium markets?

Horton: We are looking for more ways to help contractors solve the problems frequently encountered when doing this type of work. For instance, attendance has risen dramatically at our High Rise Council meetings, which include news and educational programs, as well as provide input for our legislative and local government agendas.

BASF News: What are the biggest challenges builders face today?

Horton: Clearly, it is the rising costs of land, labor and materials. From the time a buyer signs a contract to the actual delivery of a home or condominium, the builder is incurring extra costs that can wipe out any profit from the transaction. Everyone is nervous about that situation. A builder's price points now must include enough room to compensate for these cost increases, which can be difficult since they don't want to price themselves out of the market.

BASF News: What's happening to material prices?

Horton: Worldwide demand has been pushing up the prices of raw materials, including cement products, gypsum, metals, and lumber. It's a good time for these suppliers to make money, and of course the prices never go back down once they go up.

BASF News: How do rising costs affect affordable housing?

Horton: Clearly, rising costs are making it more difficult for our members to serve the needs of median-income buyers like teachers, nurses, and police officers. Incentives and concessions from local government, such as waiving or mitigating impact fees, can help our members increase the supply of affordable housing in South Florida. One of the BASF's goals is to give everyone the opportunity to be a homeowner. In that regard, affordable housing is a big challenge for all of us.