THE 82% HOUSES -or- THE FIGHT TO CREATE THE PERFECT HOME

Over the past many years I have had the pleasure of working with some of the truly great residential architects from around the country, many of whom would be considered the legends of the industry. And these exceptionally talented men and women provided my clients and myself with some amazing single family homes, townhomes, condominiums and rental apartments. I am proud to have worked with these designers and to have participated in the process that created housing units that are as livable today as they were when they were designed up to 40 years ago.

In the past, it was typically understood and agreed that the “client”, the builder or the builder’s marketing director, would have done the market and competitive research and combined that with the builder’s capabilities and vision to create the strategy on which the new home designs would be based. The architect would then take that strategy and utilizing experience and talent, plus ongoing input and critique from the client, translate that into livable, exciting, salable home designs.

Most recently, I have been working with a client on a single family community and the client selected an architect with whom he and I have worked before with more than acceptable results. This time, however, it seems that the architect is willing to be satisfied with what I consider to be “82% houses”.

Specifically:
– the elevations are 82% of what they should be (the rooflines are neither impressive nor cost-optimized, the home entries create no exciting sense of arrival, the total feel is rather bland and unbalanced, etc.);
– the room sizes and orientation are 82% of great (some rooms are needlessly oversized, others are too small, there are three distinct dining areas directly adjoining each other, etc.);
– the features are 82% of what we want (the master bath lacks excitement, the kitchens are dated, dull designs with imperfect work areas, secondary bedrooms have undersized closets and lack direct access to bathrooms, etc.);
– the basic designs are 82% of fully usable (the homes lack the ability for optional variations within the basic structure – den into bedroom, game room into master study, bedroom into second master suite, etc.).

Now it may not appear that a new home that is only 82% of optimal would be a problem to sell for 82% was a solid “B” when I was in school but the elements are each, individually, 82% so that the total home is actually only 45% of optimal (.82 x .82 x .82 x .82) and that, by any scoring method, is a “D”. How many of my readers would wish to have to sell a home when the design is universally considered to have received a failing grade? Continue reading

DR. DAN’S 12 STEP PROGRAM for SUCCESS in HOMEBUILDING and RESIDENTIAL DEVELOPMENT ©2015

Twelve Step programs are well known for their use in treating addictive and dysfunctional behaviors. The first 12 step program began with Alcoholics Anonymous (A.A.) in the 1930s and has since grown to be the most widely used approach of other programs in dealing not only with recovery from alcoholism, but also from drug abuse and various other addictive and dysfunctional behaviors.

12 steps #2I apologize in advance to any of my readers who may personally been or have family or friends in or in need of a 12-Step Program but I believe that the basics of these programs not only provide hope and a foundation for personal self-improvement but also for the structure of success in any business and, specifically, the homebuilding industry.  And please forgive me for this statement but I believe that much of what I see across the country in homebuilding and residential development is often dysfunctional.

So with what I hope will be a little latitude and tolerance on your part, here is “Dr. Dan’s 12-Step program for success in Homebuilding and Residential Development”:    

Step 1. – Admit Powerlessness – we must admit that we are powerless over the market as it is established and managed by forces beyond our control and acts solely of its own volition.  We, as builders and developers, cannot create a market nor the demand for housing, only work to satisfy the needs and desires of the market as it may exist from time to time while recognizing that demand is subject to continual evolution.   And while we may be powerless over the causal factors of the market, we are not powerless over the actions necessary to satisfy the market  

Step 2. – Find Hope – we must believe that a power greater then ourselves can be of assistance and that power is knowledge – knowledge of the market and all of its components.  Only by studying the housing market and all of the underlying factors thereof can we hope to understand the true demand, the competitive factors that exist and the real and viable opportunities that are presented for success.

Step 3. – Never Surrender – we must make a decision to accept reality and take action, not just give up and fall by the wayside.  That action is to create a strategy for success based upon thorough research and analysis of the demographics and psychographics of the market, the economic conditions and factors, the competitive marketplace including both new and resale housing, and area and site specifics.    Continue reading

THE CIRCLE OF LIFE FOR THE HOMEBUILDING INDUSTRY?

The newest publication from the U.S. Department of Housing and Urban Development is well worth reading –

2014 CHARACTERISTICS OF NEW HOUSING:

https://www.census.gov/construction/chars/pdf/c25ann2014.pdf

What I found especially noteworthy and useful as both a sales tool and a strategic marketing element were the following facts:

  1. Although the average price per square foot of new homes has risen from just over $20.00/s.f. in 1974 to a little over $115.00/s.f. as of the end of last year, in inflation adjusted dollars the current cost per square foot is actually less than it was 40 years ago;
  1. The average new home size increased from just over 1,600 square feet in 1974 to slightly over 2,700 square feet at the end of 2014, a gain of more than two-thirds.  But as the average household size has declined from just under 3 person in 1974 to approximately 2.5 person in 2014, the average home size on a “per occupant” basis person has increased by 92%;
  1. As new homes have become increasing larger, even at the same effective cost (on a square foot basis), housing affordability has decreased by 50% as incomes have not kept pace with the actual rising prices.

sold!A major challenge for the housing industry if it wishes to continue to grow and prosper is the need to overcome the gap in affordability, especially for the first time buyers.  That will necessitate targeting a broader market segment than is currently being served;  a market with price sensitivity issues necessitating more cost-effective construction practices combined with smaller home sizes that still provide the essential design, functionality, utility and special features and benefits that today’s knowledgeable and sophisticated home buyers desire.  And that would, to a great extent, take us back to where our industry was in the 1960s and 1970s.

But that’s just my opinion!

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