As Colorado housing advocates and stakeholders collectively exhale after an initiative that would have capped new residential growth at 1% of existing housing stock in any calendar year got yanked from the ballot by its original anti-growth proponent, a new initiative--this one aiming squarely at Colorado's housing attainability crisis--is about to get underway.
Home prices in the Denver and Colorado markets have risen to averages regularly nudging the $500,000 watermark, a historical high, and now Oakwood Homes, whose own average selling prices in the area hover up around $400,000, will introduce a new line of new homes whose price tags will come in at half of that half-million-dollar figure.
Oakwood expects to break ground this week on an initial wave of a bold new line-up of six new floor plans, ranging from 1,040 square feet to 1,750 square feet, that will be marketed under a brand new flag for Oakwood, American Dream Homes.
Oakwood, which will offer new homes for sale at as low as $225,000 in its Green Valley Ranch master planned community, with a phase one of about 30 homes, and plans are to develop and build over 100 of the American Dream Homes in Colorado this year. The plan is to roll out American Dream Homes models as a workforce housing crisis fighter, aiming pricing, square footage, locations, and design at the household budgets of essential workers priced out of an increasing number of America's economically vibrant metro areas.
"Led by [Oakwood chief operating officer] Scott Thorson and head of architecture [vp of product development] Don Carpenter, this came out of efforts of a team of about seven or eight of us, where we fast-tracked a special project to see if we could design, develop, and build homes for a population of teachers, first responders, fire fighters, and other essential workers who are being priced out of the Denver market," Oakwood ceo Pat Hamill tells BUILDER.
"That became American Dream Homes. They're designed to be high-density single-family, nine or 10 to the acre, all six plans built on the same foundation. We've got Colorado's newest DSST public school [a charter/public school focused on STEM education and training] in Green Valley Ranch, and this is part of the Denver public school district--we hope some of the teachers will be able to attain homeownership there in the community."
Hamill and the American Dreams Homes team at Oakwood worked extensively to value engineer a structure the company--using its truss, panelization, and componentization construction processes--could build profitably at the $225,000 price level. Oakwood, as we've reported, draws on the deep financial, technical, and technological resources of its Berkshire Hathaway-owned Clayton Homes parent, which is sharply focused on a strategy to make new homeownership more accessible to more Americans.
A key part of the ability to build fast, right-the-first-time, and efficiently--and make gross margins work--in addition to allowing for personalization touches despite pre-fabrication comes through Oakwood's focus on a "seamless" customer experience. Partnerships such as Oakwood's alliance with building information modeling firm BIMaire, which works to connect the dots in design development, construction documents, detail development and management, mechanical and structural engineering, estimating, interactive floorplans, and interactive virtual models; all from the same CAD model.
Collaborative initiatives that pair Oakwood's progressive approach to construction and assembly technologies and BIMaire's "concept to close" modeling and virtual sales experience begin to remove time, materials, and other costs from the process that do not directly produce value to the ultimate home purchaser.
Extracting wasted costs, and building homes--in square footage and spec--precisely designed, engineered, and planned to price in within the means of America's "missing middle" working household represents not only a lever to get at construction costs, but also may work to influence local regulatory officials to speed up and lower some of the typical cost barriers to development of more attainably priced new communities.
Volume builders like D.R. Horton and LGI Homes led the way with strategic and operational business models that aimed squarely at lower-priced entry-level opportunity, and many companies have followed suit in the past 24 months, with first-time-buyer, starter home floor plans, land development and positioning strategies, and construction models.
Despite a "mix shift" that reflects a move in the market toward younger, entry-level buyers, pricing of new residential development continues to skew to the higher-income tiers of the entry level market. Denver, where Oakwood's new American Dream Homes brand line will launch, serves as an example.
According to BUILDER sibling Metrostudy's latest executive summary of the Denver market:
"Housing affordability continues to be a major concern for the industry, prospective buyers, and government and economic development officials. At no time in Denver’s history has housing been as expensive as it is now with only 22% of new home starts priced below $400,000. Starts below $299,999 are down 66% and are now virtually non-existent. The price bands with the largest year-over-year gains are the $500,000-$599,999 segment with a 28% increase, and the $600,000-$699,999 segment with an 83% increase. These two segments combined account for 31% of all homes built in the metro area and demonstrate the continued strength of the market in general."
Continued strength and sustainable, regenerative fundamental strength are two different things. Although housing's post-Great Recession recovery has gained traction with a well-to-do vanguard of younger buyers, America's "missing middle" is just that, missing in action from the momentum and from access to the American Dream of homeownership.
Oakwood's American Dream Homes line is design to jump the fences that have largely blocked builders' path to serving this growing need.
