Founded in 1994, Simonini Builders forged a reputation throughout Charlotte and the Carolinas as the premier luxury and custom home builder in the market, known as much for executing brilliant design as delivering top-notch quality and performance. The company’s portfolio boasts more than 700 homes in those 16 years, an enviable pace for a shop that provided a true custom home experience to its buyers, even when it built from a portfolio of plans devised by some of the country’s leading housing architects. That Simonini Builders racked up numerous design awards for its work—including Builder’s Choice Grand awards in 2002 and 2007—is secondary to the comfort and style it has delivered to its buyers and the timelessness of its neighborhoods.
Q: How have you adjusted your business in response to the current housing economy?
Ray Killian Jr., co-founder and CEO: We announced in early September that we would be winding down our business by the end of this year. We’ve experienced unprecedented changes in the economic environment and financial values in the housing industry that simply will not allow us to sustain this business. We decided to do it now because we’re not seeing it get any better in the short term.
Alan Simonini, co-founder and COO: The market for the million-dollar homes we used to build is now so slow and so small that we have to look at other opportunities [that don’t suit our current business model].
Q: Where do you see those opportunities?
AS: In this town, the merchant builders have gone south of $350,000, leaving what we think is a large market in the $400s to $600s that is not being addressed.
Q: How have you addressed that opportunity?
AS: We engaged [architecture firm] Bassenian-Lagoni to help us make functional, comfortable luxury homes work at that price point. The result is our Island Collection, a series of seven architecturally designed homes [each with three elevation choices] that we’re building and selling in the $500 to $600s.
RK: Even with a higher per-foot cost than the merchant builders, we’ve presold nine units in that collection [since early 2009] to a segment of buyers that are still willing to pay for a higher level of finish and a design and building process that feels like it’s custom even though it’s from a portfolio of designs.
Q: Given the economy, what do home buyers value now?
RK: We spent a lot of time surveying and asking buyers to help us come up with the program for the Island Collection. We found that they still value large master suites, outdoor living areas, and combined kitchen-family-eating areas.
AS: They’ll live with smaller secondary rooms if they get those things that Ray mentioned, and they’re also accepting flexible-use spaces instead of separate rooms for exclusive uses.
RK: Really, it comes down to figuring out what the banks value and will appraise properly to fund a [mortgage] loan. We lost the ability to get those values on our higher-priced luxury homes. We offered so much more than our competitors and the merchant builders, but stopped getting credit for it on appraisals.
Q: Do you think those values will shift when the economy recovers?
AS: I think there’s been a fundamental value shift [among consumers] that excess is not cool and that efficiency is. That could change, but it won’t happen soon.
RK: If you look at the demographics, Boomers have been slapped in the face and are realizing that at 60 years old they probably won’t get another bite at the apple [of excess], so they’re looking at what we call “right-sized” living. And those in their 20s and 30s are into efficiency. As long as they have their technology, they’re happy. Besides, new banking standards won’t allow that kind of excess in the future.
Footnote: In announcing that it would cease operations by the end of this year, Killian and Simonini indicated that third-party equity investors in the communities in which the company builds had expressed interest in forming a new home-building company to fill the void and continue to produce and sell homes (perhaps with former Simonini staff members) consistent with those currently being built. That includes The Preserve at Robbins Park, site of the local HBA chapter’s annual HomeArama, in which The Island Collection will be exclusively featured. Stay tuned.