During the past few weeks, I have spoken to several local builders to better understand how they are dealing with the added competition of large-production builders. What is most interesting is that none of the builders I spoke with considered the large-production builder to be a threat or competition for the local builder's product. Rick Myers of WestMark Homes put it best when he said, "Home builders are no longer just building homes, we have to be business managers in order to stay in the game." All of the builders I spoke with indicated that the greatest challenge they face is trying to buy developable lots to build their homes on. Land costs and development regulations are making it increasingly difficult to build on just a few lots at a time, so the local builder is being forced to buy larger parcels or participate in development co-ops with other local builders to afford the additional expense of development.
Due to our strong economy and a surge in the demand for homes the last few years, the development process is taking longer than ever. Local planning departments are understaffed and overworked, and land sits vacant while plans are being reviewed.
As the payments on vacant land rise higher and higher, builders struggle with the undue hardships of the longer development process. In most cases, it now takes upwards of 12 months just to get through the preliminary planning stage. By final plat, a landowner has lost more than 18 months of production time on that parcel of land. Another component to the time factor is the dramatic labor shortage the home-building industry currently faces. Contractors, subs and suppliers are all scrambling for and trying to keep good employees, and unfortunately, this demand is creating a frenzy for experienced help.
One builder relayed a story to me about a subcontractor new to the area who was demanding to be paid cash in order to stay on the job! As a result of the current labor shortage, many of our builders have been working with local community colleges to re-institute builder-trade programs into the curriculum for high-school seniors and
According to Dennis Sovick of Sovick Design/Builders, being able to replicate the character of an old neighborhood with in-fill projects sets him apart from the pack. His strategy and that of many other builders is to specifically build what the production builder cannot.
Probably the greatest asset a local home builder can market is his (or her) personal experience and knowledge of the local community. Knowing the local political scene, understanding the building codes and having inside knowledge of the market is a huge advantage, said Brian Boos of Executive Homes in Greeley. "Working with and being trusted by other local land owners is important for our success" Boos said.
Steve Spanjer of Spanjer Construction relies heavily on his relationship with his customers for referrals and repeat business. Spanjer's proudest accomplishment is that his buyers become his friends. Even his employees hang around for a full career. One of his employees recently retired after being with the company for more than 16 years.
Myers of WestMark Homes and Dave Anastasio of ABBCO Builders both agree that personalizing their service to the specific needs of the customer is most critical to their success. Myers said that his customers see a value in the quality of the product he offers and their ability to work directly with him. He believes that having more flexible overhead helps with the cyclical nature of the business as well. Anastasio's customers become so close to the building project that he'll often find them sitting out on the job site
eating lunch. He believes in trying to customize his homes to the specific needs of his client while also accommodating their time schedule for purchase and move-in dates.
"My buyers meet with me and have one-on-one conversations with me," he said. "We build the home together. My buyers become a part of the project, and they enjoy it!"
All of the builders contributing to this article stated that they prefer to use local subcontractors and suppliers whenever possible.
"We're an endangered species" Anastasio said. "And we've got to stick together".
For the most part, our local guys are competitive in price, though not necessarily the cheapest. Anastasio likens the local home-building industry to a small mom-and-pop shop that used to be the only store in town. "Now we've got Wal-Mart, Kmart and Target all asking our customers to come buy from them," he said. Local home builders are a tight-knit group. They believe that no matter what the economy does, or how crazy
the market gets, they will prevail over all others. Because they are vested in the community, they take extra special care of their customers and the other companies they work with. As Greg Bever of G. Bever Construction put it, "As long as we can give the customer what they want, whether it's an acre-size lot or a townhome, we'll be in business."