Historically, home buildershave fallen into one of two camps: custom craftsmen specializing in one-of-a-kind homes or volume builders who build houses en masse, and have fine-tuned their systems and pro formas to a T. But all that’s changing now. Thanks to digital technology, we’ve entered an era of hyper automation and extreme personalization. Even in these lean times, buyers still crave tailored spaces that look and feel like unique expressions of themselves. But they don’t want to get bogged down by minutiae when it comes to selections, and they don’t want to pay the premiums associated with custom design. Steve Kendrick, a builder based in Charleston, S.C., is one of the many to have evolved in response to this new reality. Before the bust, revenue streams for his company, Structures Building. Co., were split almost 50/50 between one-of-a-kind residences for well-heeled clients, and spec homes for those with refined tastes but who wanted the instant gratification and slightly lower price tag of a move-in-ready house.
Things have changed a bit since the peak.
“We can’t build spec homes anymore because the banks just aren’t financing them,” says Kendrick, whose boutique outfit builds approximately 10 homes per year. “And while a lot of builders in the area have gone out of business, their superintendents have gone on to start their own companies, so the number of custom builders on the market hasn’t actually gone down. We just have new competitors now whose overhead is limited to a truck and home office, no workers’ comp or experience running a business, under-pricing homes. Instead of complaining about it, we’re looking for a new niche that, with luck, will allow us to stop doing bid work.”
With this goal in mind, Kendrick is on the cusp of launching HouseSimple, a build-on-your-lot program offering a library of luxury plans with preselected, pre-priced base packages, as well as upgrade options for lighting, fixtures, hardware, appliances, and exterior paint selections.
“A lot of people get scared off by the custom building process because the design meetings and selections are so time-consuming,” Kendrick observes. “The idea behind HouseSimple is to give buyers a blueprint as a starting point. From there, they can keep it simple with the finishes and schemes we’ve preselected, or they can fully customize. Or they can customize just one part of it, such as the lighting package. The overall idea is to simplify the process and make it less overwhelming for those who want something that looks and feels custom, but don’t have the time to pick every little detail.”
Kendrick recognizes there are trade-offs to going down this path. HouseSimple homes won’t command the same $1 million-plus price tags as his custom jobs, or even the prices of the fully loaded spec homes he built prior to the bust. Instead, he’s anticipating a more moderate price range of $400,000 to $750,000 per semi-custom home, not including the lot price (which the client carries, thus minimizing the builder’s risk). It’s a necessary concession that acknowledges growing competition from resales and foreclosed homes, he says, “including new houses that have never been lived in that are now available at really reduced prices. Usually these kinds of buyers want to be in a house sooner rather than later, so we’ve got to make our process as quick and easy as possible, but still customizable.”
Kendrick isn’t the only custom builder who realizes that while buyers may say they prefer to have it their way, a blank canvas can be daunting.
“We are always happy to design from scratch, but some people like the idea of being able to select a space and modify it,” says Carol Ann Zinn, whose firm, Zinn Design Build, builds approximately 15 to 20 homes per year in Chapel Hill, N.C. Many of the designs created for custom clients are subsequently added to her firm’s plan library, where they become springboards for derivative versions.
Learn more about markets featured in this article: Los Angeles, CA.