A few months ago I conducted an interview with US Master Builder.
This is the third in a series of Q & A to report.
What is the builder's forecast for new home starts in the US for the next 12 months? 24 months?
This depends upon where you are. They are excellent for Florida, Texas, Arizona. Other areas it simply depends. What most people don't understand is that there's always growth. Cities grow in spurts but they also have controlled growth. As one part of an area dies from age it is revitalized and rebuilt. It is a changing cycle.
How do changes in interest rates affect sales of first time, middle class, and estate housing? Aside from the obvious, any interesting statistics or trends?
I'll tell you a secret. The answer is that it doesn't effect the housing industry. If you will watch the news when you hear about the housing industry in a slump or slowing down -- Greenspan in on the news within a few days adjusting the interest rates to ensure continued growth. The building industry is the engine of our economy.
What does effect the housing industry is lower wages and our jobs going to foreign countries. If people can't afford a home this directly effects the housing industry.
What progressive processes are being implemented for more environmentally friendly and better insulated homes? All concrete framing? (no wood) Other unique materials and approaches?
We use the current technology in materials. Concrete is outdated and has many environment problems. Our homes are the most environmentally friendly homes that you'll ever have built.
No wood is used except for molding and cabinets. But when we can convince the buyer we have access to material for wood products that are made up of recycled material that looks more real than wood and is vastly superior.
We have access to luxurious carpet that is made from recycled plastic soda bottles. We have access to recycled paint that has no out gassing. Recycled roofs that have a 20 year warranty. Our homes have a R-70+ rating. Meaning less energy required for heating and cooling.
What changes are being implemented to improve customer service to new home buyers? (My daughter is buying a Hovnanian home for a fraction of my last home purchase, yet she is getting a weekly status call from her new home sales representative!)
This depends upon your builder. In our case we provide our buyers, investors and developers with daily video updates. They log into their account on our site and the site supervisor walks them through what was completed for the day and what is scheduled for the next day.
Our clients have video documentation on their property. We also provide service after the sale. If three years after the purchase, the neighbor throws a ball through the window or the cat destroys the carpet -- all the buyer has to do is log on to their account.
Tell us what needs to be replaced or repaired and in what room and we can do it almost immediately because everything is in our database about the home.
What are some factors to bear in mind when purchasing undeveloped property for the purposes of rezoning?
Be prepared to hold on the property for a long time. First thing to check before purchasing is to ensure it's not part of or can be part of endangered species.
Then make sure that it was never part of or owned by a gas station, fuel company, salvage yard or had tire dumping. Also get expert tests. Make sure the land will allow for property to be built on it.
What methods does the builder use to evaluate prospective parcels for development, and determine the price to be paid for the land? (Again, assume we have a basic level of understanding)
This is the developer's job. The builder usually doesn't get involved with this part of the business. If I am building for land then I usually look for property already developed but the developer is running low on funds or having other financial problems. Then we negotiate a fair and equitable deal with them.
What general advice would the builder give to developers who are just getting their feet wet in the market?
Locate a Master Builder to work with. Master Builder's have a vested interest in ensuring your profitability.
They can answer the questions you have about what to build and how to determine profitability.
The more successful and profitable you are the more successful and profitable they are.
Be honest with the Master Builder you choose to work with. Ask for their assistance.
That's all for this time folks. Hope your find these questions & answers informative. If you have any other questions, just send them to me and I will impose on Leonard's generosity and time once again.