Professional Builder - June 2013

Managing Custom Changes
Page 46 June 2013
The Margin Gap: Part II

www.HousingZone.com
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Positioning for Success

Innovative design ideas that capture interest and drive sales
ALSO IN THIS ISSUE

PHOTO: BROOKFIELD HOMES
Design Next: Ideas for Tomorrow / 16 Small Houses That Live Big / 36 Single-family Detached Hits / 42
2012 JESSE H. NEAL AWARD WINNER
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Professional Builder
Volume 78, No. 6
42 [ DESIGN INNOVATION] DESIGN NEXT: IDEAS FOR TOMORROWS MARKET A look at which generation, Boomers or Millennials, will have more impact on future home design. [ DESIGN INNOVATION] DESIGN INNOVATION REPORT Nine architects and designers present creative design ideas that grab the attention of todays home buyer. [ HOUSE REVIEW ] SMALL HOUSES THAT LIVE BIG Professional Builders House Review design team balances openness with privacy.
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[ SINGLE-FAMILY DESIGN] POSITIONING FOR SUCCESS The right combination of location, price, and design is catching a wave of new single-family home buyers. [CUSTOMER SATISFACTION] MANAGING CUSTOM CHANGES Builders can deliver the perception of customizing without busting the pre-engineered design. [ PROFIT MARGIN ] THE MARGIN GAP: PART II Scott Sedam shares the metrics that builders should use to measure their operations and find more profit. [ BUSINESS MANAGEMENT] TREND LINES AND STUTTER STEPS Noelle Tarabulski shows how being too conservative during the recovery can result in lost opportunities. [ BUSINESS MANAGEMENT] STRATEGIC SOURCES OF SUPPLY Charles Schneider explains why long-term, strategic vendor relationships matter more than ever before. [ SALES & MARKETING] STAYING FOCUSED IN A RE-EMERGING MARKET Bob Schultz advises builders to scrutinize their conversion ratios and find areas that need improvement.
[PRODUCTS]
frontofbook
06 08 10 INDUSTRY PERSPECTIVE Be in the moment, now EDITORIAL The education of a design philistine MARKET UPDATE FHFA sets new loan purchase guidelines; Foreclosures returning to pre-crash levels; Land buy shows demand for Inland Empire HOUSING POLICY UPDATE Government designates 23 new MSAs
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ON THE COVER: Haven, a new Brookeld Homes community in Chula Vista, Calif., features two-story detached homes and includes yard space not offered previously.
PHOTO: BROOKFIELD HOMES
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4 Professional Builder June 2013
PRODUCT REVIEWS
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industryperspective
Be in the Moment, Now
recently re-read Moby Dick and have to say that I was stunned by how vivid and modern it seemed. I felt transported to the streets of New Bedford, Mass., in the 1820s and to the decks of the whaling vessel Pequod. The clarity of the writing and its vibrancy are among the many reasons why Moby Dick is considered one of the Great American Novels, and Herman Melville, a giant among great writers. Aside from English majors, very few people know the book did not sell well initially. From the time it was written in 1851 until 1891, when Melville died, the book never sold through its initial printing of 3,000 copies. His net pay for the book in his lifetime was $5,500. So Melville kept his day job, working customs in the port of New York City. Melvilles story is one of determination. He wrote the book in a farmhouse in Pittsfield, Mass., over the course of a single summer. He wrote pro-
To be a good builder, you really have to be in the moment. You have to know what key buyer groups want.
lifically on and off for the remainder of his life, but he never knew in his lifetime the success his work would ultimately achieve. In 1891, when he died, the newspaper obituary about him was less than 50 words. In fact, it was not until 1922 that Moby Dick and Melville were re-appreciated and better understood for their greatness. Melville was ahead of his time; yet that did not stop him from writing, nor did it stop him from taking the time and energy necessary to produce other classics such as Billy Budd. A college commencement speaker I heard this
spring made a point that is likely understood by many successful people, including Melville. He told the graduates that most of the time, when you are really doing your best work, you often are too immersed in the details to know if you are having any impact at all. The key to success is to be in the moment and to do the best you can on the work you have in front of you. The builder Joseph Eichler likely understood this point. Today his California Modern production homes, built by the truckload in the 40s, 50s, and 60s, are wildly sought-after on the resale market. Unlike Melville, his work also sold well right away. Here was a builder who did not follow convention. He brought high design concepts to the average new-home buyer of his day. That is an accomplishment in and of itself. But the lasting value of those homes over time is particularly impressive. To be a good builder, you really have to be in the moment. You have to know what key buyer groups want. And the details matter. In this issue we are grateful to nine architects and designers who submitted ideas for what is happening now, ideas that relate many buyer segments, including an emerging groupthe Millennials. The hard part is figuring out how to be more like Eichler, whose particularly great work sold well right away, and less like Melville who, despite his greatness, was too far ahead of his time. By listening to the research and focusing on the drivers that are motivating todays buyers, you have the opportunity not only to sell a lot of homes, but also to build homes and communities that stand the test of time. And if you find yourself a little too immersed in the details of this work, that is probably a very good thing. Patrick OToole, Publisher | Editorial Director potoole@sgcmail.com
Professional Builder June 2013
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editorial
VOL. 78 NO. 6
2012 JESSE H. NEAL AWARD WINNER AND GRAND AWARD FINALIST
The Education of a Design Philistine

ne of the coolest job sites on which I ever worked was the rooftop of the Wrigley Building, where I labored during a summer between college for a crew repairing parapet walls. Not only was I treated daily to a gorgeous birds eye view of the Chicago River and downtown skyscrapers, but I saw up close a display of style that pedestrians never witness. For several weeks, I mixed mortar in the shadow of a clock tower modeled after the Seville Cathedrals Giralda Tower and carried bricks past the intricate designs cast on terra cotta panels and tall finials. I could appreciate the pomp and grandeur of landmark buildings, but I only perceived architecture and design for the purpose of creating a look or style. A couple of years later, I had the opportunity to step inside a Prairiestyle house designed by Frank Lloyd Wright. On the outside, the house looked very private and hidden by dominant horizontal lines, long overhanging eaves, and small windows. Yet the interior opened my eyes to the concept of design for the purpose of function. The space was open and bathed by natural light pouring through rows of windows that opened the walls to wide-open but secure views of the street scene immediately outside. So I had a taste of how design can improve the quality of life. Years after buying my first house, my wife and I remodeled that bungalow by tearing down the wall between our bedroom and kitchen. We put an island in the middle of the space, and our new great room forever enhanced all of our activities from famConsumers are catching up with ily board game night to entertaining guests at holiday parties. One of my commercial building the notion of smarter design. buddies who built his home with thick concrete sandwich walls, a novel approach at the time, had among his construction project reading materials, The Not So Big House Life by designer Sarah Susanka. He lifted a few of her ideas to create a floor plan with efficient storage and rooms that can do double duty for a play area and hosting parties. Now consumers are catching up with the notion of smarter design. This idea has morphed into several fronts such as energy efficiency, wringing more utility from less square footage, or designing space that functions well for all dwellers, not just inhabitants who are aged or have a disability. Innovative builders are latching onto designs that complement building science by making production faster, cheaper, and enable the builder to sell buyers on the long-term value of owning their quality-built house. We invited designers to share their creativity about subjects for which they are passionate, be it a whole house design, room concept, floor plan targeting particular buyers, or even elevators. Enjoy the next big ideas. Mike Beirne, Editor mbeirne@sgcmail.com
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STAFF
EDITORIAL DIRECTOR | PUBLISHER Patrick OToole 847.954.7919; potoole@sgcmail.com EDITOR Mike Beirne 847.391.1051; mbeirne@sgcmail.com MANAGING EDITOR Kyle Clapham 847.954.7965; kclapham@sgcmail.com CONTRIBUTING EDITORS Susan Bady | Bob Schultz | Scott Sedam DESIGNER Robin Hicks GROUP DIRECTOR PRINCIPAL Tony Mancini 610.688.5553; tmancini@sgcmail.com DIRECTOR OF E-MEDIA Adam Grubb 317.219.7546; agrubb@sgcmail.com EVENTS MANAGER Judy Brociek 847.954.7943; jbrociek@sgcmail.com DIRECTOR OF AUDIENCE DEVELOPMENT Doug Riemer DIRECTOR OF CREATIVE SERVICES & PROMOTION Sandi Stevenson SUBSCRIPTION INQUIRIES Circulation Department, Professional Builder 3030 W. Salt Creek Lane, Suite 201 Arlington Heights, IL 60005-5025 REPRINTS Heidi Riedl 920.397.7056, hriedl@sgcmail.com
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Custom Quality Within Reach

Custom-manufactured and standard door hardware and accessories, made in the U.S.A. by Longleaf Collection Why should high-end home buyers have to settle for off-the-shelf hardware? Your clients can have custom-designed door and cabinet hardware and at reasonable prices from Longleaf Collection. Longleaf, which is known for its American-made collection of quality brass door hardware, custom manufactures, finishes and assembles hardware to customers requirements. Longleaf offers a complete collection of door and cabinet hardware for the home, available in custom finishes and options to match any dcor. Its solid brass hardware lasts for many years of beautiful service. Single dummy passage and privacy sets, plus backplates, levers, knobs and more Single- and double-cylinder deadbolt and mortise entry sets Multi-point entrance trim sets include a selection of levers, knobs and latches for interior/exterior doors Thumbgrip entry sets Push and pull hardware for doors and entryways Doorbells, knockers, stops and other accessories Cabinet knobs and pulls in various styles and finishes Bathroom accessories such as towel bars and rings Give us your vision, and well make it a reality. We bring your design within reach.
marketupdate
MORTGAGE SECURITIES
FHFA Hands Fannie Mae and Freddie Mac New Loan Purchase Guidelines
The mortgage market footprint of Fannie Mae and Freddie Mac may be on the path toward contracting after their regulator issued instructions for the GSEs to purchase only l qualifi lified d loans. l The Federal Housing Finance Agency (FHFA) recently released guidelines instructing both enterprises to stop buying loans that are subject to the ability-to-pay rule, beginning on Jan. 10. Fannie and Freddie will no longer purchase mortgages that have a term of more than 30 years, are not fully amortizing, or include fees in excess of 3 percent of the total loan amount. Both entities are to buy only loans that meet the requirements for a qualified mortgage, as defined by the Consumer Financial Protection Bureau earlier this year. Effectively, this means Fannie Mae and Freddie Mac will not purchase interest-only loans with 40-year terms or those with points and fees exceeding the thresholds established by the rule, the FHFA said in a statement. Other loans deemed eligible for purchase include mortgages that meet the special qualified mortgage definition or are exempt from the ability-to-repay requirements outlined in the Dodd-Frank Act. The GSEs can buy loans that are processed through their automated underwriting systems and loans with a debt-to-income ratio greater than 43 percent. The National Association of Federal Credit Unions contends that these guidelines will negatively affect consumers in underserved and rural communities. The end result is that a number of otherwise financially healthy borrowers, who do not meet the stringent qualified mortgage standards for one reason or another, may be denied a mortgage, said Carrie Hunt, general counsel for the credit union association. PB
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Foreclosures and Bad Loans Near Pre-Housing Crisis Levels

More homeowners are staying current with their loans as several mortgage trackers report that foreclosure and loan
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uneven economic and job growth in the U.S., and there are still many borrowers without stable, full-time employment, or that are still unemployed, said Michael Fratantoni, MBAs vice president of research and economics. RealtyTrac said total foreclosure activity between April and March dropped to the lowest level that the Irvine, Calif.,-based real estate company has seen in six-years. A total of 70,133 properties started the foreclosure process in April, off 4 percent from March and down 28 percent from the comparable year ago period. As of May, 11.3 million mortgages were at least 25 percent underwater, down from 12.8 million in May 2012. PB
delinquency rates declined during the first quarter and through May. The March Mortgage Monitor, the most recent report as of press time released by Lender Processing Services (LPS), Jacksonville, Fla., showed that the rate of new problem loansseriously delinquent mortgages that were current six months agofell below 1 percent for the first time since the early days of the housing crash in 2007. New problem loans approached pre-crisis levels at 0.84 percent and closed in on conditions that existed during 2000 through 2004 when the rate was 0.55 percent. Borrowers with loan-to-value ratios of just 100 to 110 percent typically default at more than twice the national average, but the number of loans in that condition fell 41 percent compared with a year ago. Arizona, Florida, Nevada, and California still exceed the national average in terms of the number of borrowers with negative equity positions, but even those states improved 40 percent since January 2012. Foreclosure starts declined 8.2 percent between February and March and foreclosure sales rose 10.1 percent. The Mortgage Bankers Association (MBA) also reported the lowest level of loans entering foreclosure since the second quarter of 2007. The combined percentage of loans either entering foreclosure or being one payment late during the first quarter fell to its lowest level in four years, dipping to 10.3 percent. While noting the decline is important, the MBA warned that parsing seasonally adjusted swings from true performance after the housing crisis is difficult. We remain in a period of slow and
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LAND Sage LLC, Temecula, Calif., announced the transaction in May. Doyle said that Foremost Communities plans to process tentative maps to finalize the development plans as approved under the Toscana Specific Plan. Foremost intends to develop the site and initiate a builder lot sales program for merchant home builders. The Tuscanthemed project calls for 1,443 units of single-family and multifamily residences. The specific plan offers a mix of densities ranging from two to five dwelling units per acre for single-family homes and eight to 14 units per acre for multifamily residences. In addition to the communitys proximity to the Cleveland National Forest and the Gavilan Hills Reserve, other project amenities will include parks, hiking trails, sports park, pool, and recreational facilities. Demand for land is strong, inventories of homes for sale and lots for home building is shrinking quickly, Doyle said in a written statement. We have seen an increase in finished lot prices of approximately 15 percent to 20 percent since the beginning of 2013. The sale of Toscana is further demonstration that the Inland Empire land market is continuing to strengthen. Home builders want to capitalize on land that is near jobs, shopping, entertainment and transportation. We have multiple, large land deals in escrow and some additional ones that will soon be under contract. PB
Land Buy Shows Strong Demand for Inland Empire

Foremost Communities, Irvine, Calif., closed the off-market purchase of what is said to be the largest sale of Inland Empire land in seven years. The residential land investment company acquired 960 acres of Toscana, a master-planned community located south of the City of Corona in Riverside County, Calif. The purchase price was undisclosed. Tom Doyle, one of the founders of Irvine-based Whittlesey Doyle, which brokered the deal for the seller, Sunny
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housing policy briefing

GOVERNMENT DESIGNATES 23 NEW METROPOLITAN STATISTICAL AREAS
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HOUSING MARKET SNAPSHOT

BUILDER CONFIDENCE DECLINES
he federal Office of Management and Budget recently announced new delineations for the nations Metropolitan Statistical Areas, which are used to track building permit activity and housing data. Major changes to MSA definitions take place every 10 years, when population counts and commuting patterns are revised following the decennial census. Twenty-three areas were designated as MSAs for the first time, including 10 in the South, five in the Northeast, five in the West, and three in the Midwest. Pennsylvania added four new MSAs, the most of any state. The new MSAs are the following: Albany, Ore. Beckley, W.V. Bloomsburg-Berwick, Penn. Carbondale-Marion, Ill. Chambersburg-Waynesboro, Penn. Daphne-Fairhope-Foley, Ala. East Stroudsburg, Penn. Gettysburg, Penn. Grand Island, Neb. Grants Pass, Ore. Hammond, La. Hilton Head Island-Bluffton-Beaufort, S.C. Homosassa Springs, Fla. Kahului-Wailuku-Lahaina, Hawaii Midland, Mich. New Bern, N.C. Sebring, Fla. Sierra Vista-Douglas, Ariz. Staunton-Waynesboro, Va. The Villages, Fla. Walla Walla, Wash. Watertown-Fort Drum, N.Y. Several urban areas lost their MSA status. In some cases, the counties affected were absorbed by another MSA. For example, the two counties that are home to Poughkeepsie-NewburghMiddletown, N.Y., now belong to the New York City MSA. The MSAs that lost their status are the following areas: Danville, Va. Holland-Grand Haven, Mich. Poughkeepsie-Newburgh-Middletown, N.Y. Palm Coast, Fla. Sandusky, Ohio Builders and property owners who make use of government housing programs should be aware that these MSA designations affect the metropolitan-based system of income limits and fair market rent determinations. But it will be at least a year before they feel the effects of these definition changes. PB
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Builder condence, according to the NAHB/Wells Fargo Housing Market Index, declined two points as the industry contends with growing pains. Housing starts rose 7 percent to an annualized rate of 1.04 million. New-home sales also gained momentum, increasing 1.5 percent to an annualized rate of 417,000 homes. Remodeling activity declined 1.5 percent to $105.4 million.
ABOUT NAHB: The National Association of Home Builders is a Washington, D.C.-based trade association representing more than 140,000 members involved in remodeling, home building, multi-family construction, property management, subcontracting, design, housing nance, building product manufacturing, and other aspects of residential and light commercial construction. For more, visit www.nahb.org.
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DESIGN NEXT:
By Mike Beirne, Editor f Millennials are on the path toward accumulating less wealth than their parents generation, can they buy houses? Will they have any impact on house design? Young adults born after 1980 are underemployed, and their unemployment rate is more than double the national average, according to Generation Opportunity, a conservative activist group. Theyre carrying $45,000 in debt, mostly college loans, per a study by PNC Financial; and the bulk of nearterm job growth is expected to come from the service and retail sectors jobs that hardly pay wages that will boost the ranks of the middle class. The future of marketing new homes for this group might involve providing a product that enables willing parents to invite their adult children to live under the same roof. Consider that 21.6 percent of adults between 25 and 34 years old were living in a home where someone older was the head of household, according to 2010 U.S. Census Bureau data. That figure is up from 15.8 percent in 2000 and 11 percent in 1980.
Ideas for Tomorrows Market
Millennials are not going to be lifelong renters, but living in a multigenerational home could be a life stage many will have to pass through before buying their own place. Some designers are just catching on to that market need, but Robert Hideyone of the architects featured in PBs Design Innovation Reporthas been designing multigeneration homes since 2000. Neil Howe, the historian, economist, and demographer, coined the term Millennials along with long-time coauthor William Strauss. Howe studies the collective personalities of generations and has written several books about Generation Y, although hell caution you that Gen Y is a misnomer. The name mistakenly implies that adults born between 1980 and 2000 are an extension of the Gen X generation, born between 1965 and 1979. No generation is like the one that precedes it, so he prefers Millennials. Recent surveys from home builders and sellers about Millennial housing preferencessmaller over McMansion, automated systems, home theater and officedidnt reveal much new
information for Howe. He is more interested in learning what their attitudes are regarding houses with open versus closed porches, and what they think about their neighbors and being closer to their community. Ironically, some attributes that attract Millennials also are a draw for Boomers trading down. Sarah Susanka, another designer on these pages, notes that infill will become trendy as homebuyers opt for neighborhoods that are less auto dependent and deliver a cozy sense of togetherness. Both buyer groups have a hankering for modern and minimalist, which are signatures of Phil Kean designs. Heres another observation builders and designers could consider for marketing purposes. Unlike previous generations that invited their older parents and grandparents to live with them, Boomer parents are inviting adult Millennials. Both generations are doing what immigrant and large extended families have done for decades: pool resources to live in one building, whether its a multi-unit home or a house remodeled to accommodate an
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design innovation report
OPPORTUNITY NUMBER ONE: MILLENNIALS OR BOOMERS?

By Mollie Carmichael Millennials may be Americas largest and fastest growing demographic group, but their Baby Boomer parents should be the generation that attracts the spotlight from home builders. They are the largest group currently shopping for a home, according to our Consumer Insights survey of more than 20,000 participants. An estimated 10,000 Boomers are turning 65 years old every day, and their home needs are changing. Comparatively, only about 16 percent of the Millennial generation is 25 and olderthe prime ages for home buying. Forty-two percent of Millennials is under 21 and less likely to buy a new home in the near term. Boomers fueled the housing market when they started buying homes and raising families. What will they do as they rapidly shift gears out of family mode? These older buyers are out in the market looking at new homes, but JBRECs Consumer Insights survey also shows they are the most satised group with their existing home. Boomers will only move for the right opportunity. Parents also are holding on to their Millennial children longerwhether they like it or notand would prefer to stay in the home they have worked so hard to create. That preference might make this group lean more toward remodeling rather than buying new. Many of the Boomers were not savers like their parents, and they are living longer; therefore, planning for nancial security will certainly fuel change for these consumers. We are beginning to see signs of this shift as the housing market recovers. One example is Lennar Corp.s success with its Next Gen homes, which offer two separate living quartersperhaps for multiple generationson one property. Another positive sign is that Del Webbs sales activity among many of its active adult communities throughout the country was reported to be up by more than 40 percent year-overyear in 2012. So what will Boomers do next? They are discretionary buyers. Builders must understand what motivates Boomers. Considering that people 55 and older will account for 45 percent of all U.S. households by the year 2020, Boomers remain opportunity No. 1. Mollie Carmichael is a Principal with John Burns Real Estate Consulting LLC, Irvine, Calif.
in-law apartment. Some parents are digging deeper into their wallets. The Boomer parents are co-signing loans, said Howe. Theyre giving mortgages to the kid and just charging them for the interest rate. Its not a bad deal. They figure theyll do better investing in their kids, even if theyre charging them just 2 or 3 percent, than they would putting the money in the bank. If two or three generations are living under one roof, even in autonomous units, all dwellers would appreciate the benefits of universal design espoused in the next few pages by Esther Greenhouse and Darin Schoolmeester. The concept of expandable rooms from Nick Lehnert also can appeal to the lifestyles of both generations. Everyone yearns for privacy, and that desire for outdoor refuge is answered by Scott Adams. Given that Boomers saw much of their net worth evaporate in the stock market and housing crashes, and Millennials carry too much college debt, designs that render houses more efficient and affordable, such as entries by Larry Garnett and Todd Hallett, will be in play.
www.HousingZone.com/PB Professional Builder
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IDEA SPACES
Nick Lehnert, KTGY Group Inc., KTGYs R&D Studio and Idea Lab www.ktgy.com nlehnert@ktgy.com
e have expandable le folders, expandable luggage, expandable dining room tables; the list goes on. But what if home buyers had expandable rooms? If the family room had a connected idea space, it could afford additional family uses while the family room was already engaged in activities. It could be used as an area for working on homework, an informal special dining area for the kids, or a quiet area for reading and recluse. A special idea space could be a den, man cave, woman cave, moms management center, tech center for the family, hobby and craft center, or a play room for children, all of which would be connected to the hub of the housethe kitchen. If the dining room had an idea space it could expand the formal area to accommodate more people for those special holiday dinners, or it could turn into a serving bar, a wine service area, or casual/ conversational seating while waiting for dinner. How about having two distinct dining areas: one that could be termed for formal dining and the other to be used for everyday life experiences? If the kitchen had idea spaces they could expand the utility of the kitchen in different directions based on the homeowners specic needs or wants beyond a typical kitchen conguration; pantries could be large enough to accommodate a management center, appliance bar, or supersized pantry. If a laundry room had enough idea space it could take on numerous utilities, such as extra storage or a supersized dry goods pantry. A garage with idea space could be a monster garage offering room for up to ve cars and a 50foot motor home. If it had space that is extra wide, extra deep, and extra functional, complete with high ceilings that allow for extra storage off the oor, it could offer plenty of room for toys like boats, motorcycles, Ski-Doos, bicycles, and, of course, a man cave (or a woman cave). If the home used sliding glass doors and walls to blur the line between outdoor and indoor spaces, it could create privacy when needed between two interior rooms. What if 92 percent of homes purchased were bought (or chosen) by women? Wouldnt you want to learn what women prefer and how they want to live in their home? Wouldnt you want to include lots of storage and idea spaces?
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NEW ELEVATOR APPLICATIONS
D
Darin Schoolmeester, AIA, NCARB MVE & Partners Inc. www.mve-architects.com dschool@mve-architects.com
ue primarily to initial construction cost and long-term maintenance considerations, residential buildings have historically included elevators only when they are functionally essential (such as mid-rise or high-rise buildings), or where they are mandated by building codes or accessibility laws. Recent project goals and market trends have allowed MVE & Partners to explore unique elevator design applications, as well as the inclusion of elevators in buildings where they have previously not been feasible. Three recent projects with elevators incorporated in the design include the following: Meridian is a luxury mid-rise condominium project in Newport Beach, Calif. It utilized a doublesided elevator with an integrated security system to achieve private access from common amenity areas and secure parking directly in each home. This plan is the ideal solution not only for security, but also for privacy and convenience. Meridian The Irvine Community Land Trust in partnership with AMCAL Housing had the goal of creating an on-grade, high-density affordable housing community that goes well beyond code minimums for accessibility to meet the special needs of disabled tenants. The incorporation of an elevator in this threestory, on-grade building was only one of the many universal design elements included in the Alegre project. Alegre
Meridian
Alegre
A-Town
MVE is re-planning Lennar Corp.s A-Town Metro site and re-organizing the street framework to create parcels with more efcient shapes and critical sizes. As part of this effort, the design team is repositioning the residential project types to include senior-targeted, ongrade buildings (stacked ats with density ratio at 24 du/ac) with private, convenient elevator access from private garages to front doors. A-Town
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BRINGING MODERN TO THE MASSES
Phil Kean, AIA Phil Kean Designs; WayCool Homes designed by Phil Kean www.philkeandesigns.com; www. waycoolhomesus.com contact@philkeandesigns.com
odays homeowners are looking for something different than the same old elevations theyve seen over and over. Innovative architecture is in demand and the old boxy oor plans are being replaced with open, exible layouts. Technological modern conveniences and cleanlined, minimalist interiors are considered fresh, new alternatives. Home plans offering plentiful natural light and a connection to the outdoors are desirable for their naturally organic living environments. This two-story plan features distinctive architecture, minimalist interiors, attention to detail, indoor/ outdoor living, and sustainable design. The warm, modern elevation opens to an interior with a refreshing blend of contemporary design, comfort, and pure luxury. Large overhangs and low-e, oor-to-ceiling sliding glass doors provide abundant natural light and a connection to the outdoor spaces. The sliding glass doors on the great room, breakfast nook, and master suite open to the homes courtyard with covered lanai, pool, and spa. The covered lanai increases the homes living and entertainment areas by more than 1,000 square feet. By using consistent materials and a simple palette inside and out, these indoor and outdoor areas blur one into the other. Built into the lanai are motorized retractable screens that can be lowered to protect these indoor/outdoor spaces from insects and solar glare. The screens also can retain up to 90 percent of the homes conditioned air, depending on the density of the mesh chosen. Working in harmony with the architecture, interior details develop a feeling of luxurious, resort-style living. This plan incorporates interior architectural elements including backlit oating ceilings, directvent replace, and a stacked stone feature wall. A sculptural staircase provides an architectural focal point throughout the primary living area. Together these contemporary elements create dramatic spaces for everyday living.
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Thoughtfully designed.
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CREATING SEAMLESS INDOOR/ OUTDOOR LIVING
Scott Adams, AICP Bassenian Lagoni www.bassenianlagoni.com sadams@bassenianlagoni.com
ncreasingly, todays new homebuyers want an intimate space, and the Alta Del Mar plan provides a private outdoor environment, separate from the public realm of front courtyard spaces and neighbors in the rear yard. This 4,458-square-foot design delivers the indoor/outdoor lifestyle and living spaces buyers seek today. The mid-plan courtyard space allows unexpected rooms in the house to enjoy an indoor/ outdoor experience. In this case, the living room and formal dining room expand to the side courtyard. The design takes the pressure off traditional yard spaces because the courtyard acts as an additional outdoor area. Designed for move-up family buyers, this home includes a generous rear yard; however, the addition of a side courtyard provides a more intimate outdoor area for a couple or smaller gatherings. Alta Del Mar amenities and benets include the following: The replace and television make the courtyard a true living room rather than just a seasonal space. Extends the living and entertaining space. Covered patio provides a transition space from the indoor to outdoor environment. Opens up sight lines, allowing natural light and ventilation throughout the home. Provides the rst-oor guest suite with direct access to an outdoor living room.
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24
ISNT IT TIME SOMEBODY CUSTOM BUILT SOMETHING FOR YOU?

With expert local service from more than 3,500 convenient locations, color specication services and quality products that save time and money, Sherwin-Williams is the coating supplier with the resources and expertise to customize solutions for you. So you can stay focused on custom building for others. For fewer callbacks and more happy homebuyers, call 800-524-5979 to have a representative contact you or visit sherwin-williams.com/home-builders.
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2012 The Sherwin-Williams Company
ENABLING DESIGN FILLS THE GAP

e have an incredible opportunity for utilizing design to improve wellness and meet lifestyle desires. When we design for a variety of ages, abilities, and scenarios, all generations can live more independently and satised. Thats when we know we have made a difference. Every project and product must take three approaches to achieve enabling design solutions: 1. Human factors and ergonomics such as height, reach, and sensory abilities 2. Task goals 3. The users desires SOCIALLY SUSTAINABLE HOUSING Enabling homes are sustainable approaches to living as they incorporate no-step entries, wider doorways, outlets, and controls within 18 to 44 A.F.F., plus pullout trays and drawers. These features typically have been for people with mobility needs; but consider that typical able-bodied residents will be the largest beneciaries. These features support wheeling suitcases or bikes in and out of the house, carrying sleeping children, heavy packages and furniture, cooking, bathing, and countless other activities because they consider human needs. Typically, we arent designing for these common activities. Yet homes that work for a variety of living situations, ages, and abilities work better for both initial homeowners and future buyers. TECHNOLOGY AS AN ENABLER Technology can play a positive role in enabling a healthy, independent lifestyle. Riding the smartphone/tablet wave is ideal, as users exist in every generation. Thus, applying technology to safety and security is more welcomed than safety-specic devices such as traditional personal emergency response systems. Advanced tech products, combined with a home automation system, can control the HVAC, lights, lock and unlock doors, and let residents see who is at the door or who has come in. The user interface is often better and adjustable; just consider the tiny font on a grey LCD screen of a wall-mounted thermostat versus a home automation system on a tablet. THE NEW NORMAL OF COMMUNITY PLANNING Since its inception at the turn of the previous century, single-family residential housing has been protected by zoning ordinances and designs that no longer meet societys current needs. However, communities that reduce restrictions on Accessory Dwelling Units (ADUs) respect the double-digit increase in multigenerational home sharing over the past ten years. This approach reduces the need for informal care givingparticularly for the sandwich generation and nancial burdens for older parents and boomerang children. Road maintenance projects that incorporate the principles of complete streetsdesigning for the needs of non-motorized transit (pedestrian, wheelchair, stroller, and bicycle) by reducing lane width, increasing shoulder width, providing medians, and longer cross times with countdown signalsmeet both our desire to walk and bike as well as our need for physical activity.
Esther Greenhouse, M.S., CAPS www.esthergreenhouse.com esg@esthergreenhouse.com
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PHOTOS: LINDSAY FRANCE
2013 Hearth & Home Technologies Inc.
Nobody remembers how the lamp reflected in her eyes.

MISSED OPPORTUNITY
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Add warmth. Add memories. Add prots. Visit www.replaces.com/pro to download free sales tools and nd your local provider.
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THE LEAN DESIGN
Todd Hallett, AIA, CAPS TK Design & Associates www.tkhomedesign.com thallett@tkhomedesign.com
I H F tilizing lean design to distinguish and stand apart from competition has become a way forward for the countrys leading builders. Lean design takes an alchemist approach to planning. It combines the knowledge and skill of the building team, trades, and architect to develop design concepts that optimize marketability. The result becomes a home that builds efciently, employs cutting edge trends, and maximizes absorption. A common misconception is that lean design is another term for value engineering. Value engineering is to lean design like a pepperoni is to pizzajust a component. The example design is an 1,860-square-foot rambler. A. The great room/kitchen/dining all live together to create one large room. This setup is a favorite for casual buyers who love to entertain. B. Bedroom No. 3 can easily convert to a study for empty nesters. C. The unique buddy bath setup allows for multiple users for daily activities and does double duty serving as a guest powder room. D. A large Costco pantry helps keep the contents organized. E. A stairway leading to a bonus room above the garage allows for inexpensive optional space. F. The owners tub has been eliminated, providing room for a large double shower. G. A pocket ofce with a pocket door provides a great, messy space for bills and other paperwork. H. A laundry area that is accessed by the hall and owners closet has been a huge hit with buyers in 2013. I. A large covered lanai expands living space by creating an inexpensive outdoor room. With lean design being the driver, this home is easy to build, efcient with materials, and responsive to the needs of todays buyers. These benets, combined with a charming exterior, make it real tough to beat at 1,860 square feet. Melding low-cost dramatic planning with a knockout exterior is the formula that many of todays leading builders are using to increase prot margin and distance themselves from their competition.
A G E D
C B
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What Gives?
The patented Yield-Link structural fuse, that's what.

As the latest innovation from Simpson Strong-Tie, the Strong Frame special moment frame features four Yield-Link structural fuses that eliminate lateral-beam bracing and are replaceable after a major seismic event. Whats the advantage? Its easier to specify and it can save building owners signicant cost. As with our other moment frames, there is no welding, only bolted connections. Learn more by calling (800) 999-5099 or visiting www.strongtie.com/smf.
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2013 Simpson
Strong-Tie Company Inc. SMF13
THE TWO-BEDROOM HOME REDEFINED
Larry W. Garnett, FAIBD Larry Garnett Designs www.smartlivinghome designs.com larrygarnett@larrygarnett designs.com
equests for two-bedroom homes are increasing as Baby Boomers begin to downsize and Millennials delay marriage and starting families. Additionally, approximately 20 percent of new home buyers are single women, many of whom want more efcient homes. However, the two-bedroom house has always presented a challenge. The reason is simple; a third bedroom just doesnt add much to the cost. Yet, this extra 170-to-180 square feet becomes a critical element when clients, appraisers, and real estate professionals calculate the ever-so-important cost per square foot. The low cost of a third bedroom helps amortize the total price of the home per square foot. Its just the simple math of dividing the total cost by the total footage. Often, when builders construct a two-bedroom design, they merely eliminate one of the bedrooms from a standard three-bedroom plan. The result is a two-bedroom home that sells for almost as much as the same home with three bedrooms. So, how are we redening the two-bedroom home? First, and most important, by not eliminating any footage. Instead, were repurposing it. The 180 square feet from the third bedroom is now allocated to the living room, kitchen, and owners suitethe areas where many of our clients spend the majority of their time. The result is a home with core living spaces that live like a much larger home, just without the third bedroom that a growing segment of the market simply doesnt consider a priority. Of course, theres still the challenge of convincing appraisers and real estate agents that this preference all makes sense. The task wont be easy since theyre the ones who insisted that every home needed a formal living and dining room long after many clients considered these areas as seldom-used space. Finally, consider this: Some studies indicate that close to 25 percent of buyers actually want a twobedroom home with nice amenities and details. Thats one-fourth of the market. While that gure might be high for many markets, it does seem to offer an opportunity for a builder to take advantage of a market segment that is being ignored.
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MULTIGENERATIONAL LIVING
hile the term multigenerational living came into the lexicon just a couple of years ago, the concept has been around for more than a decade. The Irvine, Calif.-based rm Robert Hidey Architects (RHA) has been designing homes with some form of detached autonomous living space since 2000, including Esperanzaa development of 1,650-2,100-square-foot homes in Palm Desert for Taylor Woodrow (now Taylor Morrison)and La Cima, 4,000 to 6,000-square-foot luxury homes in Irvine for Laing Luxury Homes. After the economy crashed, the concept of multigenerational living began to receive a lot of attention from developers because of its appeal to a broad range of buyers who suddenly needed to incorporate in their households aging parents, boomerang kids, or extended family who wished to maintain their sense of independence. The need for multigenerational housing is still relevant today. Even though we have moved into a stronger housing market, separate living spaces to accommodate the privacy of family members are becoming extremely common in new homes, regardless of the price point. RHAs recent award-winning Lambert Ranch project in Irvine received broad national attention for its array of options for private quarters, including models with a second master suite on the ground oor, featuring exterior and interior entries, as well as free-standing guest houses and even compound estates. Residential builder clients today expect oor plan solutions with optional independent living quarters. Indeed, the rm has recently designed starter homes in Santa Clarita that offer separate rstlevel, lock-off suites that can be occupied by family members or rented out to friends, as well as in a large luxury project in Playa B Vista. Both are equipped with in-suite bathrooms, larger storage C space, and a private entry so occupants can come and go without G A imposing on the family. D A. Separate covered entry to detached living quarters lends a sense of individuality to living quarters. B. Popular open oor plan comfortably incorporates a living suite and kitchenette area with a dining nook. F C. Larger master bedroom with its W.I.C, full, oversized bathroom and dual vanity is reminiscent of hotel suites and larger homes. E D. Covered loggia with breezy outdoor kitchen and strategically organized courtyard provides a common ground where inhabitants of both homes can interact. E. Oversized garage accommodates the storage needs of multiple families. F. Spacious great room in main house comfortably accommodates multiple families. G. Separate laundry rooms within each house add to the independence of each household.
Robert Hidey, AIA Robert Hidey Architects roberthidey.com rhidey@roberthidey.com
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PHOTOS: CHRIS MAYER
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nichiha.com/elementofsurprise
COMMUNITY FIRST, HOUSE SECOND

PHOTO: CHERYL MUHR
Sarah Susanka, FAIA Susanka Studios www.notsobighouse.com info@notsobighouse.com
wo important market forces have emerged since the recession began. There are now legions of Baby Boomers whove decided its time to downsize, and in many cases move closer to the center of town where they can be less automobile dependent as they age. Their offspring, the Millennials, who grew up in suburbia, have had quite enough of that splendid isolation and never want to go back. Both groups are looking for vibrant, mixed-use, walkable communities where they can enjoy shopping and socializing close to home. In fact, the desire for this kind of community-oriented living is nothing short of astounding. In the last couple of years, Ive heard from so many Not So Big House fans who are actively searching for the perfect community rst and the house as a secondary concern. Community is where its at. Somehow, through all the deprivation and misery of the recession, weve rediscovered each other, and realized that a bit of togetherness is actually quite desirable. Weve learned that life is more fun when we have the opportunity to help each other out a bit from time to time. Its not just an Old World way of livingits enjoyable! We actually feel better about ourselves when were situated in places where we can easily reach out to one another if we want to. Dont get me wrong. Theres still the need for privacy, but many buyers today are looking for both community and privacy. So as I look into my crystal ball, Id say were heading for a period of reinvesting in existing neighborhoods and inner ring suburbs, with denser, more walkable, communityoriented inll developments that take advantage of and strengthen whats already there. The best places for new development, I believe, will be within walking distance of the local coffee shop, restaurants, and weekly farmers market. Ever since I moved to this country from England four decades ago, Ive wondered how I could help impart the message to Americans that theres an upside to density and to walking a few blocks now and then, rather than driving everywhere. I now believe the message has been received, and that a shift is happening right before our eyes. It took the great recession to wake us up to the opportunity of enjoying the unexpected company of friends and neighbors as we go about our days, sitting on the front porch, walking to the local shops, or sitting in the park watching the world go by.
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MAKE THIS
Submit your homes and plans and earn a shot at being recognized as being among the best of 2013! Be a part of our annual Professional Builder Design Awards and see how well your designs, plans and communities stack up against those from other builders and architects around the United States.
YOUR YEAR.
Submissions will be accepted in 10 categories:

Best Single-Family Attached Best Single-Family Detached Best Multi-Family Home Best One-of-a-Kind Custom Home
Best New Community Best On the Boards Best Systems-Built/Modular Home Best Green Home Best Revised Plan Best Urban Infill Solution
To learn more, contact:

Heidi Riedl at hriedl@sgcmail.com or Judy Brociek at jbrociek@sgcmail.com Submissions must be completed prior to September 1, 2013 and can date back to December 31, 2011. The deadline for ordering is September 3, 2013.
ENTERING IS EASY
1. Submit registration form and fees online. $175 for first entry; $125 for each additional entry. Visit www.housingzone.com/form/professional-builder-design-awardsentry-form 2. Receive entry packet with forms to be completed project information, project statement, photographs, drawings and plans. 3. Return entries back to us by SEPTEMBER 17, 2013
VISIT
WWW.HOUSINGZONE.COM
TODAY TO SUBMIT YOUR ENTRY.
[HOUSE REVIEW]
SMALL HOUSES THAT LIVE BIG

Professional Builders House Review design team
2013 HOUSE REVIEW THEMES JULY AUGUST SEPTEMBER OCTOBER How to Create Grand Kitchens on a Shoestring Budget Inll Housing Concepts Features That Make a House a Home
balances openness with privacy in its small-home ideas.

By Larry W. Garnett, FAIBD, House Review Lead Designer
NOVEMBER DECEMBER
lthough the average home size has fluctuated recently, the demand for smaller homes continues to grow in many markets. Reducing square footage while maintaining a high level of design becomes a challenge for both architects and builders. As youll see in the following examples from Design Hot Buttons for our House Review team, creating interior spaces that open to one another and Different Generations establish a direct relationship to outdoor living and entertaining areas are two of the design techniques often utilized. Additionally, and perhaps most imporCreating Wow Exteriors tantly, a smaller home must carefully balance the sense of openness without Versatile Plans sacrificing private getaway spaces. Of course, the ability to minimize square footage while keeping the cost per square foot in line always becomes the bec ecom omes es t he greatest gre reat atest hurdle. After all, we know that buyers and Realtors do the m math immediately. If you have some ideas and experiences ath h imme m di diat atel e y. yo ou hav som ome e sa an nd ex expe peri rien ri ence ces relating to how you deal with this issue, wed appreci appreciate your comments. You can contact me directly at larrygarnett@larrygarnettdesigns.com. ciat te your comme ment nt ts. You can con onta tact ct dire di r ct tly at la larr rryg ygar arne ne ett tt@l @lar a ryga garne ettdesigns.com.
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design
he demand for two-bedroom designs appears to be increasing, perhaps due to record numbers of single women buying homes and Baby Boomers interested in downsizing. Even though many of these buyers will forego an extra bedroom, they are not willing to compromise on other areas of the home. Kitchens, master baths, and outdoor living spaces are expected to be just as grand as much larger homes. The room sizes and amenities of this 1,883-square-foot design are closer to what you would typically nd in a larger home, minus the extra bedrooms and baths. Designed for a sloping lot, the exterior stone detailing is reminiscent of cottages built by Greene and Greene in Southern California during C the early 1900s. A B The separate guest quarters offers a exible space for a home ofce, a live-in caretaker, an older child moving back home, or simply a private D retreat for the homeowner.
E F
THE BALDWIN
DESIGNER Larry W. Garnett, FAIBD larrygarnett@larrygarnettdesigns.com www.smartlivinghomedesigns.com 254.897.3518 PLAN SIZE Main house living area: 1,543 sf Guest quarters: 340 sf Total living area: 1,883 sf
B C D
H E
G F
H I
Secluded master suite with luxurious bath One large dining area Outdoor dining Living room opens to dining, kitchen, and music alcove. Transom windows above bookcases at each side of the replace. Spacious kitchen has dining bar, pantry, and desk/planning area. Music area can also be used as a study or reading space. Loggia connects with side courtyard. Courtyard has a low stone wall on each side of the replace that provides extra seating. Separate guest quarters has private entrance from entry portal and large windows that offer a view of the courtyard. A small kitchen includes sink, microwave, and small refrigerator.
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[HOUSE REVIEW]
COURTYARD BUNGALOW
ARCHITECT Donald F. Evans, AIA The Evans Group 407.650.8770 devans@theevansgroup.com www.theevansgroup.com PLAN SIZE Total size: 1,396 sf Width: 30 feet Depth: 75 feet
his quaint lane-oriented, Courtyard Bungalow lives much larger than its 1,396 square feet and 30 x 75 envelope. The home is complete with several outdoor spaces that help expand the living area of the home, including a large front porch, spacious courtyard (with or without the optional pool), and private garden along the lane. The interior spaces of the grand room plan include a private guest suite, den, centrally located kitchen, and master suite.
A B
T
C D E F
Covered front porch with eyes on the street Large courtyard with covered lanais, providing a private outdoor oasis with or without the optional pool. Private garden along the lane, perfect for a vegetable and herb garden Large grand room overlooking the courtyard. Private guest suite with separate covered lanai Kitchen with bar pass through to the dining room, Internet desk, caf, pantry, and easy access to the laundry room Large master suite overlooking the courtyard with high glass on the bed wall, his and her closets, and a nice master bath with soaking tub and shower.
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design
GLENVIEW PARK
ARCHITECT Rick Garza, Principal Architect RPGA Design Group, Inc. 817.332.9477 ext. 206 rickgarza@rpgaarchitects.com www.rpgaarchitects.com PLAN SIZE Total size: 1,362 sf Garage: 388 sf Porches: 223 sf
heres something about feeling warm and cozy in your home, a sentiment that is hard to accomplish with a McMansion. Having a home with only what you need was a common design element during the 1920s through the 1950s. That way of thinking is making its way back into modern day ideals. Although homebuyers want to scale down, the need for three bedrooms the master, a childs room, and a guest room or ofce is still at the top of the list. Must-have items for the small home include well-equipped kitchens with proximity to the living spaces that make for a workable great room. A house with just 1,300 square feet to work with would seem to be a difcult challenge, but this plan offers the space necessary for everyday purposes. Theres an open living concept with the kitchen, dining, and living room all open to each other.
A B C D E
Open concept for a great room feel Bar space for eating and/or entertaining Large master suite with private access to back porch area Soaking tub for a luxury feel in a small home Large storage spaces
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[HOUSE REVIEW]
THE KENSINGTON
ARCHITECT Todd Hallett, AIA, CAPS TK Design and Architecture www.tkhomedesign.com 248.446.1960 PLAN SIZE Living area: 2,077 sf Porches: 235 sf Width: 45 feet Depth: 66 feet
I
C E A D A
n order to make homes live larger than their actual square footage, they should have long site lines, connectivity between rooms, and minimal hallways. Also, they must include amenities that buyers are used to seeing in much larger homes. This 2,077-square-foot home does all that and more. This house might be considered the Rudy of the production home arena. The site lines and spatial relationships allow it to play a whole lot bigger than it actually is. A large great room that is open to the dining and kitchen area maximizes square footage by eliminating unnecessary hallways. Flex space has the option to open up to the living area and kitchen. Opening this space enlarges the home visually. Exterior covered porch creates exterior living space that expands the home. Kitchen is completely open to the living/ dining area. The large island with wrap around seating acts as working and serving surface. Owners suite is on the opposite side of the homes secondary bedrooms. This setup provides privacy often only afforded in much larger homes. Access from owners closet to laundry provides ultimate convenience.
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design
his design is a small-footprint home with a detached garage option. Typically when designing small plans, the primary goal is to maximize the sense of space by having open rooms owing together. This home follows that pattern with the living, dining, and kitchen all under one open volume. LIVING LARGE However, what makes the small space live large is providing private escape zones. If people can take a break from each other in a quiet corner of the house, it becomes much more livable. There are four retreat corners in this house: the master suite at the rear, a secondary bedroom suite, a den at the front, and a bay nook in the kitchen ARCHITECT for relaxing. A place for everything is also critical. There is a mud room to Richard Handlen catch jackets and shoes at both the front and rear doors. The laundry is an EDI International out-of-the-way dead end, the closets are generous, and there is a large pantry. Richard.Handlen@EDI-International.com 415.362.2880
I
PLAN SIZE Total size: 1,500 sf Width: 31 feet Depth: 49 feet
C A
D E
G B H I
Mud areas at both entries with hooks and benches, these could also be easily converted into vestibules in cold weather climates. Great room with high volume and transom windows Kitchen with bay for breakfast table or an easy chair Dead end laundry out of the way Master suite secluded from the public rooms Secondary suite optioned to be closed off from great room. Den (bedroom option) Walk-in pantry with a window Optional locations for a breezeway connection to a detached garage Drop-off recharging station in master suite
F A
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[SINGLE-FAMILY DESIGN]
SINGLE-FAMILY HOMES POSITIONED FOR
SUCCESS
With the right combination of location, price, and design, builders are catching a wave of home buyers who can now qualify for a single-family home
By Susan Bady, Senior Contributing Editor ingle-family detached homes are a perennial buyer favorite, but with the housing market still in recovery, builders have to make sure the location, design, and pricing are absolutely right. Of the four successful examples profiled in this article, three are in master-planned communities and one is an infill project strategically located inside the Washington, D.C., Capital Beltway.
Condominium sales were going well for Brook field Homes at Windingwalk in Chula Vista, Calif., until market conditions caused buyers to lose their appetite for attached housing. From 2007 to 2012, Brookfield sold 108 of 180 homes planned for its Cordova neighborhood. Then it was time for a change. [The attached] product had been around and was a little bit stale, says Rocky Tracy, vice president of sales for Brookfields Southern California region. The builder worked with Starck Architecture + Planning, San Diego, to design new, two-story detached homes. Its still a condominium, but it lives like a single-family detached home with a private yard, Tracy says. Its like a zero-lot-line situation where the wall of one home is actually the fence of your side yard. The yard space is something the Cordova condominiums didnt offer, adds architect Jamie Starck: They had either a small patio or no outdoor space at all. The new product line, called Haven, opened for sales last November.
SELLING THE DETACHED LIFESTYLE
The Haven oor plan by Brookeld Homes at Windingwalk in Chula Vista, Calif., features a great room on the rst oor and a supersized family loft on the second. This scheme offers large storage space, even walk-in closets for some secondary bedrooms. The idea was to get the living space to orient directly out to the yard, which is on the side of the house, says architect Jamie Starck.
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design
THE DARLING OF ARCHITECTURE LOVERS

Darling Homes is all about symmetry and classic architecture. Knowing there is a segment of buyers who long for the nostalgic charm and character of older homes, the Dallas-based builder introduced its American Classic Series. Its a niche product, theres no doubt about it, says Mike Carter, vice president of marketing for Dallas-based Darling Homes. But its a niche that really resonates well. The American Classic Series includes eight oor plans, each available in three elevations. They range from 2,100 to 3,500 square feet, with prices starting in the $300,000s. Designed by Darlings in-house architects, the homes have such details as wide front porches, painted front doors, square post columns, and louvered shutters. Transoms, wainscoting, beadboard, built-in bookshelves, and crown molding add character to the interiors. The series is aimed squarely at art and architecture buffs drawn to the type of home featured in Architectural Digest or Southern Living magazines. We have people buying [them] that have very high net incomes, even though its not specic to a certain income or demographic, says Carter. Its specic to people that love architecture, front-porch living, and that classic look. Darling is offering the American Classic Series at multiple locations in Dallas and Houstontypically master-planned communities where buyers can take advantage of top-notch recreational amenities and services. Carter acknowledges that the rollout has been successful, but due to the acquisition of Darling Homes by Taylor Morrison in January, he couldnt provide any specics on sales. Sufce it to say that a select group of home buyers has embraced the American Classics because they offer the best of both worlds: timeless architecture executed with air and sensitivity, and the efciency and comfort of a new home.
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[SINGLE-FAMILY DESIGN]
Grand Palm, a Neal Community in Venice, Fla., will have nearly 2,000 lots and offer ve different housing products, including villas and single-family homes, ranging from 1,000 to 2,500 square feet. The cottages (left) face one of the parks in the center of the community, which includes a clubhouse with two swimming pools, two dog parks, basketball, tennis, bocce and volleyball courts, a childrens splash park and playground, and a large, open eld.
Brookfield plans to build a total of 60 homes. Of the 45 released to date, 44 are sold and one is reserved. There are four plans, ranging from 1,718 to 2,430 square feet. Judging by the positive feedback at the November opening, We hit it out of the park. Customers were calling their friends on the phone and saying, Youve got to come and see this, Tracy says. The red-hot sales pace is reflected in two price increases since the November opening. At press time, base prices ranged from $369,370 and topped out at $417,960an increase of 5 percent since November. By mid-May, Tracy says, prices will have increased another 4 percent. Weve also been able to reduce our incentives, he says. All of the homes have a great room on the first floor and a supersized family loft on the second floor. An optional firstfloor den/bedroom is offered in some plans. The idea was to get the living space to orient directly out to the yard, which is on the side of the house, Starck says. To further differentiate Haven from competing products, Brookfield focused on storage, making the closets as large as possible and included walk-in closets in some of the secondary bedrooms. Space under the stairs was turned into a closet or pantry. The two-car garages have room for a workbench and overhead storage. The location has also been a big draw for home buyers, he says: Windingwalk has a great community center with swimming pools, meeting rooms, recreation facilities, and planned events. And because its a relatively new master plan, new schools are being built in the area. There are public parks and lots of great places to shop. Haven has attracted a significant number of Mexican nationals desiring a second home in the United States (Chula
Vista is about five miles from Tijuana). A large percentage of buyers are in the military.
Pat Neal was thinking about building a new golf-course community on 2,000 acres he owned in Venice, Fla. It made sense at the time, given that retirees and empty nesters have traditionally been the biggest buyers of new homes in Venice. Then Neal Communities took a closer look at how demographics were shifting in the south Sarasota County town, and decided to make it a multi-age community. When completed, Grand Palm will comprise approximately 2,000 homes, making it Neals largest community to date. More than 80 have been sold so far. Five different product lines are offered, ranging from 1,000 to 2,500 square feet and including attached villas and single-family homes on lots that are 45 to 57 feet wide. Prices range from the mid-$100,000s to the high $300,000s. Home sales started last September with the introduction of six models. Four additional models opened in late November. A separate grand opening for the community amenities was held in April and attended by approximately 700 people, a mix of families and empty nesters, says Leisa Weintraub, Neals vice president of marketing and creative director. Some buyers are local, but a healthy percentage are relocating from up north or purchasing second homes. The offerings include alley-loaded cottages that Neal has sold successfully in the Sarasota/Manatee/Bradenton area, says Bob Boyd, a partner in BSB Designs Oldsmar, Fla., office. They [face] one of the parks in the center of the community, says Boyd.
MIXING THE GENERATIONS
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The interior for this updated farmhouse plan in Cabin John, Md., by OPaL LLC, Lanham, Md., is designed for informal living with breakfast and Internet nooks. Builder/developer Sean Ruppert designed stairways against an exterior wall to accommodate built-in window seats on the landings.
design
The amenities are a significant part of Grand Palms appeal and are designed to attract people of all ages. They include a 4,000-square-foot clubhouse with two swimming pools; two dog parks; basketball, tennis, bocce, and volleyball courts; a childrens splash park and playground; and a large, open field for baseball or kickball. Grand Palms 39-acre lake has an island studded with pine trees where residents can hike, bike, canoe, and fish. Everything is connected by a trail system. More than 33 percent of the site is open space. Neal worked with ECo Consultants, Palmetto, Fla., to save as many large, mature trees as possible, preserve wetlands, and maintain wildlife habitats. The natural corridors are interconnected so that wildlife can safely move from area to area. Our goal was to make sure that we took advantage of the natural beauty of the property, Boyd says. We spent a lot of time [figuring out] how the entry sequence was going to work, and I think we pulled it off fairly successfully.
NEW TAKE ON THE TRADITIONAL FARMHOUSE
Builder/developer Sean Ruppert specializes in small, well-located, close-in communities in the Washington, D.C.Baltimore area. By chance, Ruppert was sitting in a land brokers office when a listing came in for a site in Cabin John, Md. Four level lots 10 minutes outside of Georgetown, right off the Potomac River, inside the Capital Beltway, with a cute little shopping plaza across the streetit doesnt get any better, says Ruppert, the principal of Lanham, Md.-based OPaL. Cabin John is an eclectic neighborhood with a variety of architectural styles, says Seattle architect Gregory Sparhawk,
who has collaborated with Ruppert for many years. A lot of these communities tend to take on multiple identities as they grow over time, says Sparhawk. In keeping with the vernacular of older Cabin John homes, he created several iterations of an updated farmhouse. Because of the way the site is laid out, a couple of lots have front-access garages, Sparhawk says. We took care not to make those garages too prominent. It was also important to maintain privacy because the homes are fairly close together. The exteriors are composed of what he calls additive forms, which give the impression of an old farmhouse that has been added onto over the years. As the family grows, the house grows, Sparhawk explains. I tried to keep the elevations fairly true to the style and focus on the proportions of the openings and the massing. The interiors are designed for an informal lifestyle. We never do formal living rooms or dining rooms, Ruppert says. We do huge breakfast nooks that seat 10 or 12 people. Ruppert, an avid follower of pop culture, admits he gets a lot of design ideas from TV shows (and not necessarily the ones on HGTV). For example, he started including Internet nooks in all of his homes after watching The Osbournes. There are built-in window seats on all the stair landings. Our stairwells are always on the exterior so we can put windows on every level, he says. Ruppert describes Cabin John Crossing as a Modern Family type of community. One [family] has a kid in college, another kid in high school, and a 5-year-old. Another couple combined their two families. And theres a single person who is raising twins. All four homes sold at a starting price of $1.8 million. Cabin John Crossing has earned accolades from the housing industry as well as buyers, winning a Best in American Living Award and several regional design awards. PB
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A well-planned and pre-priced system of options can help production builders deliver the perception of customizing
without busting the pre-engineered design.
Building Giving Homes in to is Hard... Custom Changes is Harder

By Charlie Scott, Contributing Editor
ome building is hard. When times are tough (i.e. buyers market), we jump through multiple hoops for low/no margin salesthats hard. When times are great, we retool our operations to handle large volumes of homes with leaner staffs, strained trade partner resources, and increasing cost pressures from labor and material shortagesthats hard, too. Home building is never easy. Truth is we should embrace hard. Its the barrier of entry into our business that limits the number of competitors and rewards the hardest working builders, salespeople, trade partners, and land developers. Hard is good for our industry. Now that new-home sales have nearly doubled from their 2010 low, we are facing the challenges of a recovering market. According to a survey of 25 geographically diverse home builders, the top two new hardships/concerns are finding land/lots, and retraining and developing internal staff. Clearly finding land/lots is a localized issue, so lets look at the second hardship, which is impacting builders industrywide. Changing a home building companys mindset from the buyers market of yesteryear where anything goes is difficult. Were changing from a period full of complicated customizations and price discounts to one with limited structural changes and firm prices. In fact, educating the home building staff, and especially the sales team, as to why the shift from chaos to structure must happen, will require a lot of effort. The previously
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mentioned study also showed that the average builder had year-over-year closing volume increase of 47 percent and a backlog jump of 67 percent on top of that. Thats a lot of backlog work. Most builders cannot handle the extra 40 to 60 hours of re-drawing, re-estimating, and re-pricing per sale. Neither can their trade partners. Few builders or trade partners have the staff on hand to build customized homes given the current workload and resources available. So, the builder can either sell and hold firm on the pre-engineered, pre-priced existing floor plans and options or find, hire, and train a bunch of new CAD estimators and find new trades that have extra resources. The problem with the second choice is that resources are not available and/or getting them would likely add $10,000 or more to the cost of each home. Lets look more closely at the first optionreturning to a production home building business model. By production, I mean like Toyota, Lexus, Fordpre-engineered plans with pre-defined options and little or no tolerance for custom changes. Obviously, automobile manufacturers do not make custom changes outside their pre-priced packages. If (and this is a long shot) an auto dealership would agree to a custom change, they would likely ship that vehicle out to an after-market audio, body shop, upholstery company. Then they would tack on pretty hefty margins. Contrast that example to a simple home feature change. When is a simple change not a simple change? Anytime a production home building operation is involved. Lets face it, home builders must be razor sharp in their estimating, purchasing, marketing, sales, and field operations to efficiently and profitably build homes in todays competitive marketplace. This sharpness requires architectural drawings, purchase orders, and vendor agreements calling out all the standard and pre-priced upgrades offered by the home builder. To accomplish these efficiencies, the home builder invests hundreds if not thousands of hours up front to pre-plan, pre-priced, and set up choices in the builders computer system. Everything runs smoothly until a home buyer requests a change to a floor plan, which has not been pre-planned, pre-priced, and set up. For example, lets say a customer wants to add a knee wall to separate a kitchen nook and family room. Sounds simple, right? Not so fast. Here are all the subcontractors affected by this simple request: lumber supplier, framer, electrician, drywall supplier, drywall installer, trim material supplier, trim carpenter, painter, flooring supplier, and the flooring installer. Each of these subcontractors need detailed construction drawings and the correct quantity of materials required to execute
this simple request. This burden falls on the home builders operational staff (You werent going to let the salesperson do it, were you?) to change the standard production package into a custom construction package for eleven subcontractors. On top of that, we have to hope these trades actually notice this change on a home plan that they previously worked on in the exact same way a dozen times before. The chance of eleven well-meaning subcontractors interpreting and executing their part of the change properly is almost nil. By the way, the average home builder spends $200 to $400 in extra labor costs to process even a simple but unplanned change. To make these changes profitable, a builder would need to charge for his labor costs plus the subcontractors/ suppliers increased labor costs and add a margin to the total costs, which could be $2,500 to $3,500 just for the customized knee wall. However, most home builders dont charge the true cost for a custom change for fear of losing the sale. Isnt this another form of price discounting and margin erosion? Still want to make a simple floor plan adjustment? Production builders can create the perception of offering a customized home, when they adopt the Burger King approach. Many years ago, Burger King separated itself from the frontrunner competitorMcDonaldsby offering customers the chance to have it your way. But this customizing was limited. The jingle, hold the pickles, hold the lettuce, special orders dont upset us, promoted clearly defined customization that could be supported even in a production environment. Could buyers order hamburgers medium rare or well done? Could they substitute a sesame-seed bun for whole wheat? Of course not. Yet the perception of customizing was there. That perception of choice was attractive and fell within the production realm for delivering quality and accuracy. Of course, building a home is a much more complex but you get the idea. A well-planned and executed design center can provide the perception of choice while still allowing a production home builder to achieve cost and quality goals. Common structural change requests can be pre-planned and included in the customization options. The ability to select finishing features can make any home feel customized to the average home builder, even if the floor plan stays the same. Home builders, to their detriment, can offer too much choice and slow down the personalization process, cause undue stress on the customer, and increase the database of units and prices, making maintenance a nightmare. The sales team and the design center consultants will bear the brunt of customer change challenges and dissatisfaction
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once Pandoras box of customization is opened. There are several steps a builder can adopt to minimize the changes and maximize the advantages of creating a customized feel for your homebuyers. Train the sales teams and design center consultants about what can (and cannot) be changed. Salespeople easily can get caught up in making a sale and try to push the boundaries of acceptable changes. One helpful criterion for defining customization limits is to remember that the fewer subcontractors involved in a change, the more likely that the change will minimize disruptions in the production schedule or process. Fewer subcontractors also minimize the likelihood of mistakes. For example, many home builders absolutely forbid any changes that would move any plumbing within a home.
customization as the responsibility of sales and the design centers role as personalization.
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Have your sales people and design consultants practiced their response to requests for changes that are not within the scope of your Burger Kingapproach to customizing? The answers have to be real, based on construction issues, and understandable to the homebuyer. Both the sale and design consultants also should mention that they are not able to present all the customization options possible in order to prevent dissatisfaction later when neighbors compare notes on their changes. Dene a Change Request paperwork and approval process so the sales manager and the field manager can collaborate and agree about what the company is going to do. If your change options are strongly defined, the paperwork can be in the form of a checklist rather than notes on the changeonce again minimizing the risk of problems later. Determine which change areas are under the control of sales and which belong to the design centers. Communicate that division of responsibilities to the homebuyer. Make sure sales informs design consultants about its decisions. That way, designers will know not to push for option No. 2 when buyers reach out to the design center after getting their change request turned down by sales. One approach would be to have structural changes in the hands of sales, and surface changes in the hands of design center consultants. This arrangement would define
Have a system in place for recognizing when a customization request is actually an appropriate specication change for all upcoming models. Your homebuyers can be a resource for improving current floor plans. If you track the frequency of your change requests, a switch such as an additional closet in the front hall might actually be an improvement on the original model. Builders might be wise to turn that customized feature into the standard approach for future homes. Dont be alarmed! Customizing through a strategic, welldesigned change request system can be a successful sales and closing tool if all functional areas in the home building operation support the strategy. After all, the overall objective is to earn a satisfied customer, right? All it takes is one reluctant or uninformed employee or subcontractor to create a dissatisfied buyer. By the way, when dissatisfaction does happen guess what the resolution often becomes? Price discounting or adding customer features for free. Now, do you want to deal with a simple change? For additional reading on this topic, I suggest, Uncommon Customer Service: How to Win by Putting Customers at the Core of Your Business, by Frances Frei and Anne Morriss. The authors do a great job of explaining the importance of defining what you do well, how you make money, and how to honor that skill set. Another great read is Barry Schwartz The Paradox of Choice: Why More Is Less. Schwartz addresses the importance of meeting specific customer needs via a rifle shot versus a shot gun approach with options, floor plans, colors, etc. Both books are thought-provoking. Happy reading. PB Charlie Scott is a principal at Woodland, OBrien and Scott, a customer satisfaction research and consulting firm that specializes in voice and the customer programs, customer handling/communications, operational excellence, and harvesting referral sales. He can be reached at charlies@woodlandobrien.com
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Train the builders operational staff to be able to identify the subcontractors and suppliers affected, estimate the needed materials and labor, negotiate a fair price, and have the means to put all this information on construction drawings and purchase orders.
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Scott Sedam shares the metrics that builders should use to measure their operations and discover where their prot is bleeding onto the ground.
By Scott Sedam, Contributing Editor
onth by month, the housing economy improves, despite the continual pundit-sourced predictions of illusory gains and dead-cat bounces. As gross sales rise, however, one of the greatest fears is that builders will go back to the old-used-to-be practices where volume can cover a multitude of sins. During the go-go years of 1991 to 2006, almost everyone made money building homes, yet the greatest returns accrued from the land play. The amount of money left on the table boggled the mind. This begs a critical question: On the long road back toward sales levels rivaling the best years in the industry, are similar profit levels still available? We now face increasing shortages in both labor and materials with land and lots scarce nearly everywhere, a result of the near-shutdown of the development industry during the recession. Where will we find profit? Coming out of the downturn, builders are almost universally behind the curve hiring personnel to match increased volume levels. Everywhere I go both field and office staff are at best
overworked and, at worst, stressed to unhealthy levels. At this point, the traditional approach to lowering overhead by loading more work on fewer people is not even worth a discussion. And if you are looking to play hardball with suppliers and trades to get reduced prices in the face of shortages in this market, I wont even wish you luck. So where do we turn? In my April article, The Margin GapBeyond the Usual Suspects, I introduced Survivor Homes, our friends struggling along with a 10-percent gross margin and desperately seeking solutions (see PB, April 2013, or www.housingzone.com). We walked through the usual factors impacting margin, including sales price and bid cost, and found nothing that stood out in a major way. Survivor represents an extreme case for sure, but as we went on to explore in the article, even a healthy, profitable builder pulling down a 25-percent gross was missing tremendous profit opportunity in the realm of process loss. Our quick analysis in that issue revealed at least a quarter of all builder costs are tied up in process waste and, if you ask my colleagues at TrueNorth who have spent the past seven years embroiled in this issue, that estimate is quite low. For example, the great majority of product waste measured by rework materials and waste haulage from the site is produced
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by process deficiencies. Yet the source is never attributed as such. If you are still skeptical consider that, in industry after industry where process waste has been measured extensively, the figures run from a low of 30 percent to as much as 80 percent. Twenty-five percent is, if anything, a low estimate. An aggressive pursuit of process waste is one of those conundrums that appear quite simple on the surface yet often is difficult in practice. The measurements are not that challenging in and of themselves. The big obstacle is culture, ultimately the domain of senior management. When you ask your people to begin measuring things they did not track before, most of your employees do not leap at the opportunity. More tracking appears to be additional work and, as mentioned above, no one has extra time. This pursuit will happen only if senior management buys into using process measures as a vehicle for revealing additional profit. Here are some examples that have proven fruitful.
schedule metrics
More than 20 years ago, I concluded that the best schedulers are the best builders and the best builders are the best
schedulers. My work with more than 200 builders has only reinforced that. Schedule works in profound ways to increase margins. First and most obviously, a well-conceived and wellmanaged schedule brings order to the naturally chaotic process of home building, and chaos means waste and cost. One of Dr. W. Edwards Demings great lessons was that to improve a process, you have to first stabilize it. Be honest, would any critical outside view of your current process describe it as stable and predictable? Despite the proliferations of software and web portals for suppliers and trades, the majority of work in home building is still done via phone call often only a day or two prior to the required need. That effectively precludes any hope for those who actually build our homes to operate efficiently, and the excess cost is passed on, buried in their overhead. The next time you hear one of your people declare that an extra trip or rework that should not have been necessary does not count because they do not charge us for it, put him on Porta-John duty for a week. Tell him what he is cleaning is better than his thought process. The first step for measuring schedule is to measure each house by the actual resultsthe only thing that matters. When asked about build schedule, so many builders quote
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what they have on paper, not the actual facts. There are many local terms and practices that may impact how you break this down, but establish your own schedule milestones to look something like this: 1. Signup to Release 2. Release to Foundation Start 3. Foundation Start to Frame Start 4. Frame Start to Dry-in with Mechanicals 5. Dry-In to Finish/Complete 6. Finish/Complete to Close Now, track every house and watch carefully. Where is the variation and how does it differ by site, product type, trade, or field manager? With good metrics, your processes will talk to you and show you profit bleeding onto the ground. There are many potential variables here, especially between steps five and six. Many builders schedule a full two weeks between when the home is supposed to be finished and actually closing. If so, you need to create a phase and track that as well. There is another impact of schedule that most builders know, yet seriously undervalue. That is the impact of each day on the absorption of overhead and other fixed cost. Most builders use a figure ranging from $100 to $250, but that number actually runs as much as $500 to $600 per day per unit if the saved days are used for building additional product something that most builders are in a position to do these days. Previously, I devoted an entire article to schedule (See The Gospel of Schedule, PB, March, 2011) and I suggest you start there and spend some serious time evaluating yours. If you want to focus on the one single factor that will force most other systems and processes to improve along with it, marshal your entire organization to go after schedule.
purchasing metrics
Over the past two decades in home building, purchasing underwent a partial metamorphosis into supply-chain management with the intent of reducing cost to increase margin. In the end, most of those efforts degraded into yet another version of the old beat-down as supply chain in the eyes of most suppliers and trades became better known as supply pain. Yet anyone who studies industry outside of home building knows that weve only scratched the surface in terms of building truly productive purchasing models. The vast majority of builders purchase on low bid alone, while others are
hamstrung by old, ineffective relationships they cant seem to escape. I previously wrote about how builders need to establish a comprehensive list of criteria for both selection and ongoing evaluation of suppliers and trades and actively use them. In addition to bid price, these criteria need to cover elements such as schedule adherence, quality, warranty response, participation in product and process improvements, and worker compensation factors, among others. My advice is to use that as a starting point and develop your own list of selection and evaluation criteria. Your metric is adherence to those criteria. Get the criteria right and track them. Then youll have not simply a measure of margin contribution but a lead indicator, and those are in short supply. As we discussed in the previous article, variances can be extremely misleading. Yes, track them, but do it with your eyes wide open. So what else do we measure? One of my favorites is the ratio of variance purchase orders (VPO) to purchase orders (PO). This metric is tied to variance, of course, but the ratio is more revealing because it provides a better indication of how well your systems and process are in control. A perfect world would see zero VPOs, so the percentage of work done under PO would be 100 percent. Doing 10 percent to 20 percent of work under VPO is not unusual, and I have seen builders with as much as 30 percent of work performed this way. High numbers here are a prime indication of chaos in process and systems, and margin always suffers. There are two ways to measure this ratio, by itemthe actual number of VPOs issuedor by dollars. They tell you different things so I recommend you measure both. The bottom line, however, is that each additional percentage of work done under VPO is a margin-eater, no matter how you calculate it. Fix it and find more margin. Another purchasing/estimating technique I learned 25 years ago from Mike Rhoads in Chicago is engaging in a round of mutual comparative takeoffs between the builder and the key suppliers and trades. First, you need your own takeoffs for at least the major components, including foundation, framing, all mechanicals, drywall, and roofing, among others. Do more if you have the capability. Then sit down with your favorite suppliers and trades and compare numbers. If nothing else, accuracy and understanding improves, and that reduces the chaos. Yet every time I participated in these exercises, costs came down as well. Make this exercise a requirement for each new plan that comes out. No exceptionsif you lost the capacity to perform these takeoffs, get it back.
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Track this process and watch your margin improve.
There is a book to be written here and therein lies the problem. It is easy to get so deep into job site trees that the forest is no longer visible. You can spend so much time measuring that you never get anything built. The goal is to devise a system of metrics that parallels what a good doctor does. She could order up every possible testand each of those is a metricand learn a lot. Then youd die from the tests. Instead, depending on what she is looking for, she picks a dozen or so tests that are the best indicators. They dont measure every single thing, but they measure the most critical markers. You get these right and the rest follows. Checklist systems can be problematic. They are so exhaustive that pretty soon they become mere paper games. Challenge yourself to measure the fewest possible things in a house that tell the biggest part of the story. Having said that, I do strongly recommend a few ongoing measures that the vast majority of you do not perform now. When was the last time one of your field managers checked a load of concrete for temperature and slump rate? Guess what? Your suppliers know you dont check either. So just how close to tolerances do you think he will be? Do you randomly checkactually countquantities of incoming loads of lumber and engineered wood? Youll be surprised at how much variance you find and it all represents waste in some form. You are making an impression on your suppliers that you care, of course, but even more important is what you are teaching your own people. You are training them to care about these details every day, and that concern will be reflected in margin. One more factor that is normally judged only as a cost yet serves as a revealing measure of process efficiency is site waste removal. I wrote an article about how to go after that last year (see Less Waste, More Profit, PB, September, 2012). So determine your baseline, set up your measurements, and attack it. I guarantee if your waste removal drops 50 percent you will receive a visible bump in your gross margin.
building site metrics
off in increased margin. First, establish a set of design standards for both architects and engineers that clearly delineate your goals and expectations. For example, you want them to design to even lengths wherever humanely possible. You want baths that work with standard cabinets. You never want to see a 122 x 122 bedroom again. Direct them to meet every code, plus the customer code, but nothing more. You want plans designed and engineered that are both totally cool and completely cost-effective. So spend some time, establish your design and engineering standards, and insist on compliance. Second, get your suppliers and trades involved all the way back at the black-line/conceptual stage, then at several additional points through the design process and through construction of the model. Make this collaboration standard procedure and insist on it. Track it. Finally, each house gets fully detailed, site-specific plans. The technology today makes it so simple that there is no excuse not to do it. This practice simplifies the schedule and eliminates the margin killersmistakes, rework, and phone calls for clarification. Note that although we focused primarily here on process factors that enable cost reduction to increase margin, the savings also can be used to generate more sales. In the toughest times, most savings will be applied to the builders bottom line, but we have seen some builders use savings to reduce sales price or add features and options to increase sales velocity. Nice to have choices like that, isnt it? When we began, we talked about a builder struggling at 10-percent gross margin and a much more successful one pulling down 25 percent. Yet both were after more profit and habitually looked in the wrong places. No one suggests that your traditional financial and accounting measures are not important, but to find all the profit, you need to see with new eyes and measure process at key points along the way. That approach will show you where the losses really are and the true opportunities lie. Psychologists say new behaviors that are strongly reinforced become permanent rather quickly. Watching your margins tick up as you apply these new process measures should be all the reinforcement you need. PB Scott Sedam is president and founder of TrueNorth Development. His articles appear in Professional Builder and his Lean Building Blog appears on www.HousingZone.com. Sedam welcomes your feedback at scott@truen.com and readers to join the LeanBuilding Group on www.Linkedin.com.
design metrics
There are three critical techniques you need to be a permanent part of your design process, and all have shown to pay
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Being too conservative during the recovery can result in lost opportunities.
By Noelle L. Tarabulski, Contributing Editor
Trend Lines, Stutter Steps an d

recovery, we have flatlined or stabilized at 2.5-percent GDP growth, meaning the trend line is static and does not feel very encouraging to many of us. The most important aspect of trend lines is that below the surface of the national economy are the resource trend lines and the housing trend lines. These indicators are very positive and driven by very real facts like the backlog in development pipelines and the shortage of homes for sale in some housing markets. Know the facts and realize whether your overall market conditions are trending positive or negative. Figure out which facts matter most. Those are the bits of information that will not change no matter what happens in the world around us. Make them your trend lines and use that information to solidify your decision-making confidence. Current events can affect the steepness of a trend line, but in most cases they will not reverse the trend.
heres too much noise. As executives we need to see and hear intelligence that is relevant for the success of our organizations. Figuratively speaking, we should wear blinders while excellent baroque classical music plays in our headphones. Classical music is like a trend line. Its soothing, reliable, and stable. Yet noiseweekly economic indicators, monthly housing start numbers, and other short-term statisticsprevents us from recognizing trend lines in our business and acting proactively. Instead, we stutter step. We pay attention to the noise and move forward a bit, but then pull back. We only feel more confident to forge ahead when we see others jump in first. The result is stampede in our industry not unlike the mass migration of a Northern European rodent. I call it the lemming effect. This recovery is one in which builders would do well to recognize the trend lines and take a steady course of action rather than stutter steps, which can harm your business. We all know of instances when we accidently saved ourselves from a disaster by delaying decisions because we decided we could not decide. In a downward trend-line condition, that conservatism is helpful. But in an upward trend line environment, builders should be more confident about their decision-making. Being too conservatism can slow growth. Here are some current scenarios that I see in our industry: The trades. Where did they all go? Labor costs are going up. Lot Inventory. I had enough for three years but now Ill be out of lots in 10 months. Land development. I cant find money to improve my raw ground. Cash. I dont have money to build my organization. Executives. Where are they? I need them now. Back-office chaos. Nothing is under control. My systems are weak, and my variances are not being tracked. What is a trend line and why does it matter? Trend lines normally head up or down. In the case of our national economic
Trend Line Confidence

Lets apply this thinking to your life, reduce those sleepless nights, and improve your operating results. Say a builder secures a large parcel that he must develop, estimate, and cost out. Hes also considering adding a vice president of operations because he needs to ramp up operations. But the idea of increasing overhead costs clashes with his cash-conserving ways. Yet if he delays hiring, then hell end up searching for a vice president amid a mass migration of builders who also stutter-stepped and find themselves trying to recruit senior managers just as demand slams the pool of candidates. That builder is worse off than he would have been had he believed in the trend line and acted sooner. Lets discuss how acknowledging trends could have helped builders avoid some of these crises mentioned earlier. First, the trades either found something else to do, scaled down their organizations, or left the industry. Once you realized business was recovering, the trend line turned up and the underlying infrastructure was in disrepair. Thats when back
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the Lemming Effect.

office folks needed to start reaching out and implementing support for the trades to come back to the industry. They didnt and now we have a growing labor shortage caused by stutter steps. This particular trend line is continuing upward and will become more challenging. Lot inventories and improvement efforts are connected. Builders who understood the cycle time for producing a finished lot and compared that data with improvement activity a year ago would have recognized that land in their markets was heading for a shortage. When the absorption rate is faster than cycle timewhich could be anywhere from four to 18 monthsthe shortage of finished lots is likely. Instead of using historical absorption rates, which lag actual rates, use your own in-house experience on a rolling three-month projection and annualize that figure. For example, if you sold 10 homes in three months, project you will sell 10 x 4 quarters or 40 homes and use that figure to plan your finished lot needs. Dont use the 12 homes you sold during all of last year during the initial phase of the recovery as your starting point. Many companies are in a restart mode during a recovery and need more cash so they can scale up. The feeling that your expansion plans are on hold because you dont have money to invest in your company is a symptom of failing to manage the shift from a buyers to a sellers market. Changing your cash position demands being proactive. See my article about how to raise additional capital by courting equity investors (The Next Dance, Finding Capital, PB April 2013). You can recover. Find that greatness within, hit the restart button, and stabilize your company. A recovery is the right time to believe in trend lines. GDP, though sluggish, is rising; housing demand is climbing in many markets; lot inventories are declining, and Baby Boomer retirements will create structural changes to our economy that will translate into growth opportunities for builders. The entire home building environment is gaining speed and the only way you and your organization can keep pace is to admit you must fix all your legacy issues fast. If you are on the sidelines, others are moving past you. First, get your cash position stabilized. Find financing partners and know your market well. Second, get the executives and the technology in place to move forward. Third, figure out the trend lines that matter to you and your organization. Remember jobs are being created somewhere and someone has the ability to establish a household. There are 100-year-old homes that need to be razed and replaced with the 2013 model. We need new houses. Look in the mirror and be honest. Did the butt-kicking you endured over the last five years make you wiser and stronger, or more conservative and weaker? Is your conservative streak hurting you? I can tell you that most likely it is. Remember our economy recently topped the $16-trillion threshold and, if we had a normal recovery, we should be at $17.4 trillion right now. The European debt crisis, our countrys politicized economic policies, and risk aversion are contributing to the less robust recovery to date, but the trend lines still are moving up. So in your corner of the world, apply the lessons of trend lines, stutter steps, and the lemming effect to your world view and decision-making. Every builder needs to be accountable for his or her reading of their local market trends, which are imbedded in the bigger marketplace. Our industry is contagious and will eventually infect your markets performance. Trying times call for courage when you least possess it. Yet there is a saying that great people are not born rather they appear when conditions converge, merge and cause the essence of their character to be tested. Perhaps all of us have to find that greatness in our character at some point in our lives; perhaps that time is now for those of us in the residential sector. PB Noelle Tarabulski is CEO of Builder Consulting Group of Lakewood, Colo., a management consulting firm dedicated to builders and developers since 1991. She can be reached at noellet@buildertools.com
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DEVELOP STRATEGIC SOURCES OF SUPPLY

As the supply of labor and materials tighten, long-term, strategic vendor relationships matter more than ever before.
By Charles P. Schneider, Contributing Editor or the first time in many years, builders are upbeat, housing numbers are great, and suppliers are happy. But are these conditions the calm before the storm? Builders need to prepare and face a challenge that they havent seen in many yearsrising material and labor costs and shortages. Passing the costs along by simply raising prices wont be enough to solve the problem. This time around materials and labor are confronting constraints that the market will feel sooner than the industry did during previous recoveries. If you had been tracking many of your suppliers over the last few years, like you, they downsized, right-sized, and some even went upside down and are gone. Take engineered lumberseveral of the manufacturers did not just close or mothball plants, they sold them, liquidated the equipment, and eliminated capacity that supported home building when it was at its peak. What does this mean? It means that they cannot just dust off the mill, turn on the lights, and add people to restore capacity. This scenario is not unique to engineered lumber. Almost all categories that relied heavily on new construction were hitpainters, framers, dry-wallers, and the like. Tradesmen have moved on to do something else. Given what happened before, many of them are not coming back. Where does this leave the builder? Builders will need to focus on two things. First, strengthen your supplier relationships. Dont switch suppliers after every bid. Rather develop strategic
F
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relationships that value consistency and availability every bit as much as the lowest cost. Be the best builder in your area to do business with. Second, manage your costs well.
STRENGTHEN SUPPLIER RELATIONSHIPS

Who gets the best prices, the best people, and the best service from their suppliers? From study after study that we have done about home building costs, the answer is counterintuitive. Most think the largest builders have a significant cost advantage over smaller builders. Yet, this perception is false. Who gets the best price? Builders who are easiest to do business with. What does this finding mean? Suppliers tell us that the following characteristics are as important or maybe even more important to them than the size of the business: Builders who clearly and consistently communicate their scheduling needs in a way that enables suppliers to schedule their work and arrive as planned. Builders who know what they need at the job site so there is minimal reworking of job specs and material requirements. Builders who pay fast or when expected. These practices will position you to be the best builder to do business with. Was size of order on this list? No. Were builders who jump from one supplier to another on this list? No. In fact, builders who switch constantly are in the least favorable position to develop the working relationship described above. Builders that have long-term relationships with their suppliers get the material and labor when availability is tight.
businessmanagement
The best way to create these long-term relationships, in addition to the list above is to do the following: Move towards transparent, long-term pricing. Usually a form of cost-plus so that a formula can be derived and used to establish a fair price and remove pricing from the equation. Avoid the temptation to switch. When a new trade is willing to disrupt your established relationship by offering a temporary price reduction or a discvount that you cant set as your new long term price, avoid that trade. Establish relationships and gain commitments from manufacturers, even when those products are bought by your trades. For example, roofing. Your roofer may buy the roofing materials but you can establish an agreement with the roof manufacturer to position yourself at the top of the list in the event of rationing. A buying group such as the one we run at Builder Sourcing can help with this task. In addition to preferred pricing, allocation protection can be achieved for builders of all sizes.
Albert Einstein once said, Everything should be made as simple as possible, but not simpler. Systems in home building, while taking effort to setup and load with the appropriate detail, will simplify and make possible the ability to manage costs, time, and schedule. A system will enhance communication with the trades for bidding and scheduling work. Ultimately, you will end up as the best builder to work with because your company communicates clearly, pays faster, and has the smoothest running schedule. Is it simple to get to this place? No. But reaching this point is easier to do than ever before. I know many builders that have accomplished just that at a fraction of the cost you would think and in a fraction of the time.
CONCLUSION
Builders are a resilient group. They have learned how to operate in the best of times and hunker down in the worst. Now they must learn how to operate in a new eraone with growth and constraints on supply. Those builders that learn to think of their suppliers as an extension of their own organization, think long-term versus short term, and make their business systems simpler but not simple, will thrive. PB Charles Schneider is the CEO and founder of Builder Sourcing Corporation, a professional services and systems firm that helps builders create profit with their buying group, purchasing, and systems services. Mr. Schneider can be reached at cschneider@buildersourcing.com. His companys website is www.BuilderSourcing.com.
MANAGE COSTS WELL

Builders, systems, and cost management have never been a cozy triad. They seem to go against the entrepreneurial spirit of home building. A home is still the last large item manufactured outside, with manual labor, and with minimal automated support. However, if there ever was a good time to bring computers, advanced cost management, and advanced trade communication and scheduling into home building, now is that time.
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[SALES & MARKETING]
THE IMPORTANCE OF STAYING FOCUSED IN A RE-EMERGING MARKET

By Bob Schultz, Contributing Editor
Builders cannot rely on momentum to generate sales. Identify areas that need improvement by scrutinizing your conversion ratios.
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sales&marketing
re-emerging market sounds like a good thing on the surface. The perception is that economic conditions are better and new homes will sell faster. Overall, thats good. Having been actively engaged in this industry through past recessions during the early 70s and 80s and the boom times, I have always said, its not about what the market does. What matters is what you do with the market you find yourself in. A re-emerging market can provide a false sense of optimism and perception of success. A rising tide floats all boats; so does a re-emerging market. As more homes begin to sell, all of the players involved in sales eventually will get some benefit from the momentum alone. But good markets cover up and forgive a lot of bad processes and business errors. To keep everything in perspective, you should always be asking, as Ive written before, Doing what you are doing, the way you are currently doing it, how many sales are you still missing? Dont get caught up in the exuberance of suddenly increasing sales activity because it may not last forever. Dont allow the deals the market is allowing you to enjoy lead you into complacency. Stay focused on the essential fundamentals of variables you can control, and dont worry about items you cannot. Stay dialed in to the important benchmarks for measuring your sales success. The most important are completed sales that ultimately close and fund the builder. Other benchmarks include the following: Conversion ratio of sales to the number of potential buyers with whom you interact. The source of a lead can determine that conversion ratio potential. For example, someone who visited your website and then contacts you is not a first-time visitor. Realtor-accompanied prospects have a higher conversion possibility in the short term than someone who has just started looking, has a house to sell, and is not sure they even want to move from the area. Become intently focused on implementing the correct process and measure those benchmarks all of the time. The end result will be just fine. Again ask yourself, Doing what I am doing, the way I am presently doing, how many sales have I missed? Your insight to the minor adjustments you need to make will become abundantly clear, and the marginal increases in your profit will be significant. As the market continues improving, there will be more traffic to convert. You must work more efficiently to increase your conversion ratios. Make every prospect walking through your door count. When they show up at your sales office, they are
at least thinking more positively than in recent years about buying a new home. Its your job to have a solid, planned presentation to help guide them through the buying process. Cause them to think it through. Get them to recognize that, even though interest rates have not yet risen, they will. Right now rates are still the lowest, on average, theyve been in 50 years. Make them aware that construction costs are going to continue to increase rapidly. Explain that now is the best opportunity they will have to buy, and they should do it sooner rather than later. Impress upon them that their buying power will never be greater than it is right now. In an extraordinary market, its easy for ordinary salespeople and builders to look successful. But as the recent difficult economy demonstrated, being an extraordinary salesperson or successful builder takes hard work. Those salespeople today who keep a clear focus, stay informed about their marketplace, perfect their presentation, are as diligent as they were when the market was tough, and maintain a PHD attitude (professional, hungry, and driven), will consistently achieve optimum sales performance and outsell the market. Last but not least, dont confuse your increased cash flow or the size of your paycheck with your business acumen or operational sales excellence. PB Bob Schultz is president and CEO of Bob Schultz & The New Home Sales Specialists, a management consulting and sales firm based in Boca Raton, Fla. Schultz is the author of two best-selling books, The Official Handbook for New Home Salespeople, and, Smart Selling Techniques, and was named a Legend of Residential Marketing by the NAHB. He can be reached at bob@newhomespecialist.com. FACTORS YOU CANT CONTROL Interest rates and rising construction costs What the competition does FACTORS YOU CAN CONTROL
The customers perception of rising interest rates and construction costs
What you do: Attitude Personal appearance Presentation and sales skills Follow through Appointment setting The appearance of your models Advertisements and press releases you place in newspapers and online The ofce environment that your customers will enter
What newspaper articles say The weather
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Shower Trim
Echoing the symmetrical architectural aesthetic of Art Deco with stepped features referencing the silhouette of the Chrysler building, the concealed Style Moderne shower trim set includes two open outlets and metal cross controls. Made in England using a process that combines modern technology and hand craftsmanship, the set is nished using a high-quality plating process to ensure a awless nish. For more info circle No. 812
Redesigned Starck 2
Duravits redesigned Starck 2 collection gives a modern look to the original line launched 15 years ago. The new ceramic washbasin now comes in an oval shape instead of the former circular conguration. The rectangular, acrylic Starck 2 tubs include a seamless neck rest and strong angles. Duravit has reduced the rim of the Starck Slimline shower trays to 4/5 of an inch, and they are available in both rectangular and quadrant-shape variants. For more info circle No. 815
Starck Kitchen Collection

Stylish and user-friendly, the latest Axor Starck Kitchen collection faucets come in HighArc, Prep, and Bar iterations. The Axor Starck HighArc Kitchen and Prep faucets feature an ergonomic, pull-down handle with full and needle sprays. All Axor Starck Kitchen faucets also boast ceramic cartridges and swivel spouts for smooth operation. Axor Starck Pot Fillers round out the high-design meets high-functionality line. Offering the ultimate in versatility, the Axor Starck Pot Filler comes in wall-mounted or deck-mounted versions and are available in chrome or steel optik nishes. For more info circle No. 808
Freestanding Tubs
MTI has added two freestanding bathtubs to its Designer Series. The Olivia 2 (pictured) is constructed using the brands Sculpted Finish process and the result is a spacious, seamless tub. The Parisian 2 features a bold exterior and an ergonomically sensitive interior with softly curved backrests. Both tubs are handcrafted in durable, high-gloss, Lucite-cast acrylic and are available with optional heating systems and underwater LED lighting. For more info circle No. 806
Siligranit II Sink
The sinks in Blancos Siligranit II series never fade and resist scratches, heat, and food acids. They come in eight colors and 23 shapes. The newest color, Cinder, mixes elements of gray, black, and brown for the ultimate neutral combination to ow with popular countertop styles. Blancos Hygienic+Plus surface shields Siligranit II sinks from dirt and bacteria, making them safe for food preparation. For more info circle No. 807
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PLUMBING SYSTEMS
Tankless Water Heater
Noritz adds a new residential high-efciency, tankless water heater to its ecoTough Series lineup. The Energy Star-rated NRCC661 has an energy factor (EF) of .91 for natural gas and .93 with liquid propane, approximately 30 points higher than a standard, tank-type gas-red water heater. The NRCC661 can deliver 6.6 gallons per minute with a maximum input of 120,000 BTU per hour, using a -inch gas line up to 120 feet in length. For more info circle No. 814
products
iSteam Home Steam Shower Control System

Mr. Steams iSteam touch panel system controls temperature, duration, aroma, color, and music of home steam showers. The 4.3-inch color LCD display measures 1/8 inch thick and comes in either a black or white nish. A fused silica glass and polished cast aluminum construction make the iSteam capable of full water immersion up to 3 feet. The system is designed for Mr. Steams E series home steam generators. For more info circle No. 809
SAROS Kitchen Faucets

The KWC SAROS range of single-lever kitchen faucets delivers functionality and styling that ts in with contemporary and traditional spaces. The faucets feature clean lines, a cylindrical body, and an ergonomically designed pull-out spray. The self-cleaning technology keeps the spout free of mineral deposits that can impact performance. The line includes a bar faucet with a 6--inch reach, a prep faucet with a 7-3/16-inch reach, and a full-sized kitchen faucet with a reach of 8-7/8 inches. For more info circle No. 813
Residential Tank Water Heater

The new Energy Star-qualied high-efciency condensing power direct vent water heater from Rheem is the rst in the industry to employ high-efciency condensing technology in a residential tank design. The water heater delivers more heat to the water and produces less heat exhausts from the vent. The cooler ue gases permit venting through 2- or 3-inch PVC piping. The unit also comes with a factoryinstalled exhaust riser, which vents at the top of the unit. For more info circle No. 810
DriftBath Hydrotherapy Bath

The newest addition to Aquatics Serenity line, DriftBath offers a quieter and calmer experience than the soaker, HotSoak, whirlpool, and air bathtubs. The DriftBath has more than 70 water-only ports located in the backrest and foot areas of the bath that create a soft current of water owing in one direction. It also has a thick Lucite, cast-acrylic construction, four LED chromatherapy lights, and an electronic, one-touch keypad for controlling power and lighting. For more info circle No. 811
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STRUCTURAL SYSTEMS
products
Strong Frame Special Moment Frame TJI Joists

Weyerhaeusers TJI joists with durable Flak Jacket protection to enhance re resistance provide a simple, costeffective way to achieve one-hour oor/ceiling assemblies in multifamily applications and to comply with the 2012 IRC re protection requirements for single-family homes. In multifamily buildings, the joists provide a one-hour re-rated assembly with a single layer of gypsum and no expensive mineral wool. They are available in multiple series and depths and installation does not require special tools, hangers, or training. For more info circle No. 804 Simpson Strong-Ties new Strong Frame special moment frame, which is now code listed (ICC-ES ESR-2802), is designed to help prevent damage to structures in seismic events. Built using YieldLink Structural Fuse technology, the frame is designed to ease installation and offers quick specication using readily available design software. With bolt-on/bolt-off ability, the links are fully replaceable if damaged. For more info circle No. 802
Floor Heating
The hy-PE-RTube, developed by Zurn and Dow Solutions, is one of the rst radiant oor heating solutions in North America leveraging polyethylene of raised temperature resistance (PE-RT) technology. The pipe resists recoil and lies at when installed. In addition, it offers high-temperature, corrosion, stress crack resistance, and increased ow properties. hyPE-RTube consists of ve layers, which help to reduce noise when in use, and the outer layer protects against oxidation. The pipe is suitable for snowmelt applications and turf conditioning. For more info circle No. 816
Steel Deck Framing System

Trex is rounding out its Elevations Steel Deck Framing System with a new galvanized steel post and joists in a greater range of lengths. Making it possible for contractors to construct a deck substructure made entirely of steel, the new support post offers a preferable solution to pressure-treated lumber posts, which may warp, rot, twist, split, or decay. Designed to cut time and cost, joists are now available in one-foot length increments ranging from 8 feet through 20 feet. For more info circle No. 803
SheetRock Drywall Panels

Sheetrock UltraLight Panels from USG Corporation are now ICC Evaluation Services compliant for installation on ceilings, with the long edges parallel to the framing. The -inch-thick panels are up to 30-percent lighter than other brands, making them easier to carry and install without sacricing quality. Made with up to 95-percent recycled content, the panels also qualify as a low-VOC emitting material. For more info circle No. 801
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GROUP DIRECTOR PRINCIPAL Tony Mancini 610.688.5553 | tmancini@sgcmail.com EDITORIAL DIRECTOR / PUBLISHER Patrick OToole 847.954.7919 | potoole@sgcmail.com DIRECTOR OF E-MEDIA Adam Grubb 317.219.7546 | agrubb@sgcmail.com INTEGRATED MEDIA CONSULTANTS Paul DeGrandis 847.920.9510 pauld@accelmediasolutions.com States: IA, IN, OH, WI Jeff Elliott 616.846.4633 | jelliott@sgcmail.com States: Eastern Canada Beth Emerich 203.316.9390 | bemerich@sgcmail.com States: New York City Tim Gillerlain 847.954.7916 | tgillerlain@sgcmail.com States: IL, KS, MI, MN, MO, ND, NE, OK, SD, TN, TX Robert Reed 630.460.2585 | reedmedi@sbcglobal.net States: AK, AZ, CA, CO, HI, ID, MT, NM, NV, OR, UT, WA, WY, Western Canada Michael Stein 610.918.1828 | mstein@sgcmail.com States: AL, AR, CT, DC, DE, FL, GA, KY, LA, MA, MD, ME, MS, NC, NH, NJ, NY, PA, RI, SC, VA, VT, WV EDUCATION AND AWARDS COORDINATOR Heidi Riedl 920.397.7056 | hriedl@sgcmail.com NEW BUSINESS DEVELOPMENT Pete Pirocanac 847.954.7935 | ppirocanac@sgcmail.com ADVERTISING COORDINATOR Lucia Currans 847.391.1005 | lcurrans@sgcmail.com ADMINISTRATIVE COORDINATOR David Schwer 847.391.1039 | dschwer@sgcmail.com REPRINTS Heidi Riedl 920.397.7056 | hriedl@sgcmail.com LIST RENTAL INFORMATION Geffrey Gardner 845.201.5331 geffrey.gardner@reachmarketing.com SUBSCRIPTION INQUIRIES Circulation Department, Professional Builder 3030 W. Salt Creek Lane, Suite 201 Arlington Heights, IL 60005-5025 To subscribe, please go to: www.cdsreportnow.com/renew/now?pbm
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AERT ..................................................................................... 5 Benjamin Moore & Company ........................................ 19, 67 Boral Bricks ......................................................................... 31 Country Wood Flooring ...................................................... 65 Hearth n Home Technologies ............................................. 27 In-O-Vate Technologies, Inc. ............................................... 11 Longleaf .............................................................................. 10 Kohler Residential/Light Commercial Generators ............... 21 LP Engineered Wood Products ........................................... C3 Mercedes-Benz Of North America Inc. ................................. 9 Nichiha USA .................................................................. 33, 67 Nisus ................................................................................... 67 ODL Inc. ........................................................................ 15, 67 Owens Corning ................................................................... 13 Protective Products ............................................................. 65 RAM Trucks ......................................................................C2-3 Rinnai America Corp. .......................................................... 23 Salsbury Industries .............................................................. 65 Sherwin Williams ................................................................. 25 Simpson Strong-Tie Co Inc. ................................................ 29 Softplan Systems ................................................................. 67 Sprint .................................................................................... 7 The Builders Engineer ........................................................ 12 Western Windows ............................................................... C4
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A DV AE DV RT EIR ST EIM SEM NT ENT
rendering by Gene Giles
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numbercrunch
2016
The year housing construction will recover to a normal annual level of 1.6 million units and boost residential construction employment to 2.5 million jobs, according to Fannie Mae.
Growth Struggles
due to demand and replacement needs created by workers retiring and leaving the industry, according to the Bureau of Labor Statistics.
58,700
The number of job openings that will be available for drywall installers between 2010 and 2020
1.64 million 2.1 million

The number of people working in residential construction as of last April,
Housing units
that need to be built each year between 2010 and 2020 to satisfy housing needs, says the Joint Center for Housing Studies at Harvard University.
2.2
Percentage that new residential construction and remodeling contributed to the countrys GDP as of the third quarter of 2011 about 2.3 percent below its historical average, according to the Bureau of Economic Analysis. From 1980 to 2007, residential xed investment contributed on average 4.5 percent to GDP.
according to the NAHB. That gure is up from 2 million in 2011 but trails the 3.4 million workers employed just before the housing crash in 2006. Home building jobs need to grow 24 percent to reach the 2002 level of 2.6 million jobs, according to David Crow, NAHBs chief economist.
be adding to the nations economic output if those industies were contributing their historical 4.5 percent average to GDP, according to the Bipartisan Policy Centers Housing Commission.
684 billion
The amount of dollars that home building and remodeling would
25
Percentage decrease in the number of certied appraisers during the next 10 years due to attrition and fewer new entrants, according to the Appraisal Institute.
None of the 61 banks polled in the Federal Reserve Boards April survey of senior loan ofcers indicated they were much more likely to give a mortgage to a borrower with a 20-percent down payment and 620 FICO score. Three banks said they were somewhat more likely.
68
Master Craftsmanship Meets Durability.

Evoking old-world heritage and master craftsmanship, CarraraFinishes built on LP SmartSide bring you the rich look of traditional stucco without many of the durability issues associated with it. Unlike alternative methods, cost-effective CarraraFinishes products are installed like drywall and features an exclusive system technology that allows for fast and easy installation. Built on LP SmartSide Precision Series panel, its cement-free formula offers the smooth, authentic look of stucco yet also resists moisture and cracking. Plus, CarraraFinishes products are backed by a five-year warranty* and a 5/50-year limited warranty for the panel substrate.** To learn more about how to install the exterior finish that doesnt sacrifice durability for beauty, contact a CarraraFinishes representative at 888-820-0325 or visit carrarafinishes.com.
*See carrarafinishes.com for complete warranty details. **See LPCorp.com for complete warranty details.
Built on
2012 Louisiana-Pacific Corporation. All rights reserved, Build With Us. LP and SmartSide are trademarks of Louisiana-Pacific Corporation. 2012 Global Coatings, Inc. All rights reserved. Patent No. US 7,836,652 B2. "CarraraFinishes" and "Dual-Tape-Core" are trademarks of Global Coatings, Inc.
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Managing Custom Changes

Page 46 June 2013

The Margin Gap: Part II

Positioning for Success

ALSO IN THIS ISSUE

2012 JESSE H. NEAL AWARD WINNER

Volume 78, No. 6

Be in the Moment, Now

Professional Builder June 2013

The Education of a Design Philistine

Professional Builder June 2013

For advertising contacts, see page 63

Custom Quality Within Reach

Foreclosures and Bad Loans Near Pre-Housing Crisis Levels

Give Every Dryer Some Space

Bigger. Better. More Versatile.

Land Buy Shows Strong Demand for Inland Empire

Circle 757 12 Professional Builder June 2013

housing policy briefing

HOUSING MARKET SNAPSHOT

HOUSING STARTS BREAK THE ONE-MILLION MARK

NEW-HOME SALES GAIN

REMODELING SPENDING SLIPS

Safe. Sound. Secure. Certied.

Severe Weather Doorglass. Built by ODL.

visit odl.com/pbSW for more dealer information.

Ideas for Tomorrows Market

Professional Builder June 2013

design innovation report

OPPORTUNITY NUMBER ONE: MILLENNIALS OR BOOMERS?

www.HousingZone.com/PB Professional Builder

design innovation report

Professional Builder June 2013

design innovation report

NEW ELEVATOR APPLICATIONS

Professional Builder June 2013

NEXT TIME YOU NEED A GENERATOR,

design innovation report

BRINGING MODERN TO THE MASSES

Professional Builder June 2013

REPLACE CALLBACKS WITH

Tankless Water Heaters

design innovation report

CREATING SEAMLESS INDOOR/ OUTDOOR LIVING

Scott Adams, AICP Bassenian Lagoni www.bassenianlagoni.com sadams@bassenianlagoni.com

Professional Builder June 2013

www.HousingZone.com/PB Professional Builder

ISNT IT TIME SOMEBODY CUSTOM BUILT SOMETHING FOR YOU?

design innovation report

ENABLING DESIGN FILLS THE GAP

Esther Greenhouse, M.S., CAPS www.esthergreenhouse.com esg@esthergreenhouse.com

Professional Builder June 2013

PHOTOS: LINDSAY FRANCE

2013 Hearth & Home Technologies Inc.

Nobody remembers how the lamp reflected in her eyes.

design innovation report

THE LEAN DESIGN

Todd Hallett, AIA, CAPS TK Design & Associates www.tkhomedesign.com thallett@tkhomedesign.com

Professional Builder June 2013

The patented Yield-Link structural fuse, that's what.

Code Listed: ICC-ES ESR-2802

Strong-Tie Company Inc. SMF13

design innovation report