Michael Maples is principal and CEO of Irvine, Calif.–based Trumark Homes, which closed 24 houses in 2010.
The short answer is “Yes.” However, as an industry, we have built far too many homes in places where people will not choose to live.
This recovery will be zip code by zip code. Some areas will have shortages, which will cause prices to increase. However, other zip codes will be completely left out of the recovery.
Right now, we have two economies: Silicon Valley (part of the San Francisco Bay Area in California) and the rest of the country.
In Silicon Valley, companies are hiring at an astonishing rate. In the core areas, office rents and apartment rents have increased over 20 percent since the third quarter of 2010. This is the beginning of the recovery.
Over the past three years, our mantra has been, “Buy land where the jobs will be!” Thus, we have over 1,000 lots (50/50 attached/detached) in the land-constrained, job-creating Silicon Valley—where there will definitely be a shortage of new homes.
Anthony LoCoco owns Elgin, Ill.–based Traditions Home Improvement Service, a nine-year-old residential contractor.
The suburban counties of Chicago have abundant standing inventory to clear. Once that’s done, we have an exorbitant amount of dirt sitting in a holding pattern; communities that had completed the due diligence process, some with a few closed homes. The trick going forward will be to retool what we are offering, which will require taking a few steps back and understanding that the paradigm has shifted. Any builder who wants to remain competitive will need to pioneer ways to decelerate production costs while progressively increasing overall quality to appeal to buyers in this new era.
Our company is in the concept and design stage of a master planned community within a community: a three-unit carriage-style product that has clusters or pods of homes with a limited common wall area, a common hub/courtyard, driveways, and front entries that do not face one another. Each pod would be surrounded by its own similar but unique green space.
Ben Spofford is president of Hudson, Ohio–based Benjamin Builders and Housecalls Home Services, a custom builder/remodeler.
In northeast Ohio there will be no shortage of new homes.
Here, we have a population growth that is flat at best and may be declining. Existing-home sales are lagging, and foreclosures are still a problem. Sales of new and existing homes will be under additional pressure when the shadow inventory of pre-foreclosures and bank-owned homes comes to market.
Having been in the home building industry since 1978, none of the downturns I’ve witnessed compares to the Great Recession. But I’ve also noticed that a number of developments in our area—which went out of business, were abandoned, or foreclosed on—have been started up again, by different builders. Ryan Homes just bought such a property, and I saw heavy equipment at a 300-unit site that Pulte walked away from a few years ago. Locally, a couple of developments have also started, in anticipation of future improvement in the economy.
Learn more about markets featured in this article: Chicago, IL, San Francisco, CA, Los Angeles, CA.
