Irvine, Calif.-based Fieldstone Homes first got involved in building a more affordable housing product in the late '90s in Salt Lake City. But under Foster's leadership, the program expanded. In the second quarter of 2003, Fieldstone started building these homes in San Antonio. The builder's moderately priced homes aren't the traditional government-subsidized variety. In fact, the company uses no subsidy to build its homes. How does Fieldstone accomplish this? Actually, there are a number of ways. "We have a complete system that starts with the house design," Foster says. "It's a very simple house design with a lot of interior, open horizontal space. The floor areas tend to be bigger relative to their footprints than other builders because we fill all of the air space."
Fieldstone also cuts down on options. "The Fieldstone home is basic, but they also offer a stripped-down version as the base–allowing buyers to upgrade as they choose from there," says Peter F. Dennehy, senior vice president of San Diego, Calif.-based Sullivan Group Real Estate Advisors.
Fieldstone pre-sells everything and has the building process down to a science. "It's a very consistent and predictable process," Foster says. "We start a certain number of houses every day, and we have them on exactly the same 57-day schedule." Finally, there's Fieldstone's purchasing strength. "There are a number of different intricacies," Foster says. "It has to do with how we buy our materials and how we schedule production so we can create efficiencies with our subs. Because they're efficient, they can pass them [the savings] onto us."
Foster's career in housing actually began in mortgage financing at San Francisco's Union Bank. But in 1986, after 13 years in banking, he decided to move into home building and contacted one of his clients–Fieldstone–about a job. The company gave him the position of project manager. Home building had a particular attraction. "I saw a number of things," Foster says. One, it was very quick. Assets were acquired, land was acquired, product was developed and sold. You were turning it over constantly." Plus, there was the aspect of unpredictability; although some people shy away from tumultuous fields, Foster was drawn to it. "The challenges are always there," he says. "In good markets or bad markets, it doesn't matter." Foster hit the floor running at Fieldstone. He moved up to run a division and, in the late '90s, he became the company's COO. Then, in 2001, he became president and CEO. "I grew with the company," Foster says.
Fieldstone's building process should be able to keep it producing homes at costs that are lower than its competitors. In some markets, falling land prices may help. But that's not the case in the one place that needs affordability the most–Southern California. "The land prices are falling in many parts of the country," Foster says. "Here in Southern California, will land prices drop enough that one could build unassisted affordable housing projects? My guess is no. I still think you need cooperation." The cooperation Foster speaks of is from local governments. He's isn't just referring to tax credits and subsidies.
"The municipalities need to back down on financial exactions to developers," Foster says. "For example, maybe they don't charge building permit fees or they waive other sorts of fees that they charge, which add tens of thousands of dollars [to development costs]." Until this happens, it will be difficult for Fieldstone to build affordably in its back yard.
Learn more about markets featured in this article: Salt Lake City, UT.