change

The Changing Face of Builders

I had a client in my car last week as we drove through Northern Albemarle County neighborhoods. We were talking about some of the new subdivisions that were being worked on, and we drove through at least one new neighborhood that was did not have any activity at all. As we pulled into Greene County, my client asked about the Ryan Homes that were being built on the Western Side of 29 at Holly Hill. He remarked that they looked just like one of the neighborhoods in DC that he remembered being built several years ago. It got me thinking about Ryan and the landscape of Charlottesville new construction.

05 to 08.jpg

So, I came home and pulled two pieces of information. First off, I grabbed all the new construction that closed between July 1 and December 31 of 2005, and then I pulled the same data for the same period of 2008. Not surprisingly, there were a lot less homes sold in 2008 than in 2005. I did not select only one county or another, I pulled the whole MLS. And what I found was not surprising, but when you look at it visually, it is pretty clear: the builder landscape is changing, and its changing fast.

In the second half of 2005 there were 99 builders that sold property in our area. Ninety Nine… That’s huge given the size of our market. As you look at the graph to the right, you will see that there were only 6 builders who held more than a 2% market share, the largest of whom was Hauser Homes. In 2005, Hauser was flying high with a new sales center on Route 29. They had brought in a new mortgage company to add to their all around sales effort. Bob Hauser was touting a new neighborhood that would be coming along in the next few years that he and Frank Stoner at Stonehaus were working on: Belvedere. Hauser was starting a custom home building division and had two custom jobs going in Old Trail. Further, he was moving into the high end condo / townhouse market with pricey Poplar Glen.

Not far down the list was Church Hill Homes who seemed to be able to do no wrong in the market. They launched the new Avon Park, and all the units flew off the market faster than the builder could put them up. The bought land in Wickham Pond, in Belvedere, in other counties. Church Hill was moving along. But how could they do wrong? It was 2005 and if you built it, they would buy it. There were so many builders in 2005, that 46% of the market was served by 89 builders.

05 to 08-1.jpg Important to note in the list of top 10 builders in 2005 is the absence of any major national home builder. There were rumors that Toll Bros. might be looking at coming into Charlottesville, but it never materialized. In 2006, Ryan Homes entered the Charlottesville game. The builder eyes watched as Ryan opened up shop at Old Trail with 27 lots. They entered into agreements with Kenridge near Farmington Country Club and Cherry Hill in Johnson Village. Everyone watched to see what would happen and whether Charlottesville natives would shun the outsider giant and their production build mentality. After several months, Ryan walked away from almost all the lots at Old Trail. After 3 years, they walked away from the remaining lots at Kenridge. Many could say that Ryan was not successful in Charlottesville.

However, they’d be sorely mistaken. Ryan sold out Cherry Hill, they moved to the Pavilions at Pantops, they built at the Hollymead Towncenter, they built at Holly Hill… and more… They may not have struck gold in their high end practice, but they certainly proved that a national homebuilder can compete with the locals. Maybe Brueggars can’t beat Bodo’s in a head to head, but Ryan is showing some serious strength in proving a strong value proposition for their homes.

When you look from 2005 to 2008 numbers, you notice that once unstoppable Hauser Homes has dropped from a 13% market share down to 4%. While 2005 may have had 99 builders closing on properties in the second half of the year, there were only 72 builders by 2008. And outside the top 10 builders, the market share dropped from a cumulative 46% to 44%. The biggest winner was Ryan Homes. Within less than three years in our area, they went from a zero market share to 24%. I have heard it said that they want a 50% market share in 2009. I can’t say if that is a real goal or simply a rumor, but if it is their goal, I think it is achievable.

In 2008, Church Hill still made the list despite their foreclosures and sale to Eagle Construction of Richmond. This would be the last quarter we will see Church Hill making sales under their own name. Sam Craig, with Craig Builders made the top 10 list. Most interesting of all in my opinion is that Southern Development has managing to hold on to their market share throughout it all, which is a testament to their flexibility.

I find all of this interesting, but what I really look forward to is seeing how the market shakes out when a rebound does occur. Will Ryan just grow faster? Over this period, on a National level, Pulte Homes lost over 60% of its market value, and Centex Homes lost over 80% of its value. Ryan (NVR) lost just under 40%, which may not sound great, but for a home builder in this era, its pretty good.

Conversion Complete

I am thrilled that I am done with the conversion from my old blog software. All postings older than this post are from my prior site. Because of the way WordPress dates posts, all posts that follow have a “Originally Published” date at the top of the post. Moving forward, all my posts will show the correct date.

Thanks for visiting, and I hope you’ll come back often, let me know what I am doing right and wrong, and spread the word.

It’s going to take a while for me to learn enough css and php coding to get the site looking just right, but even if nothing else changes (which it will) I think this is a huge step forward.

Keith

A Wise Man Indeed

Originally Published February 19, 2009

Every once in a while I have a post that I think about for a long time, make some notes, pick out other things to add and it kinda festers. This is one of those posts. Click to read the whole post.

Every night, I sit down and read books to my kids. Sometimes, they are intended to teach – Goops and How Not to be Them –  sometimes its for the art – The Nativity (Thanks Evan) – sometimes for my own nostalgic pleasure – Caps For Sale – and sometimes just for fun – One Fish, Two Fish, Red Fish, Blue Fish.

I guess what surprises me the most is that even in some of the most simplistic children’s books, I can frequently find something that makes me think. And of the books from which I most frequently have a good take away, it is Dr. Seuss that always makes me smile.

Whether it is The Lorax and the Onceler telling us morals of environmental concerns, or The Sneetches sharing with us a story of cultural diversity and acceptance, Dr. Seuss seems to transcend the times and is frequently focused on teaching us lessons from which we can all learn.

In making the move to Nest, I have spent hours explaining to various people why I am starting a new real estate firm when the economy is in the tank. There are two quotes that I have referenced several times, and they are both Dr. Seuss quotes.
One from a little-read book called Scrambled Eggs Super! and the other from I Can Read With My Eyes Shut. While I can recommend the latter as a good book, the prior is rather silly except for one line.

If you want to get eggs you can’t buy at a store,
You have to do things never thought of before.

In one sentence, this sums up why we started Nest. (It is not intentional that this quote is about eggs, but it is rather fitting.) The current real estate industry is changing at amazing speed. And if we want to stay in front, we have to be willing to do things that no one else has tried. Some will work, some invariably will not. That’s okay. But only in a company that is small and nimble, full of innovative folks, can we be sure to have the agility to respond to new stuff any day. And with Nest, not only have I found a model that is allowing innovation, I have found partners who push innovation beyond prior limits. I am amazed at the conversations that we have daily about where the envelope should be.

The flip side of the same idea came to me from I Can Read with My Eyes Shut. I recently had a conversation with an agent with far more experience in real estate than I. When we talked about the nest model, he seemed to scoff at the notion that we can or should change anything. After all, if no one changes, we can keep operating under the old models. Why on earth would we want to provide our clients with information that empowers them? I need only point to the fact that two weeks ago, the largest firm in our MLS that did not allow IDX made the switch and opened themselves up to the Internet Exchange. It was driven by a single agent finally saying they had had enough, and their customers demanded more. To the agents who want to keep doing things the old way, by all means, keep doing it. There are still clients who want it. But for the future, I leave you with my second Dr. Seuss quote of the day.

If you read with your eyes shut
you’re likely to find
that the place where you’re going
is far, far behind

Me, I’ll keep my eyes open, and I’ll keep pushing things, and hope to have my clients push for more as well. I’m not sure where I am going, but I know that it is far, far ahead of where we are today. It should be a fun ride.

Change is Coming

Originally Published February 18, 2009

OK, So I’ve been blogging about a lot of change recently, but I have finally had it, and need to change this blog. BIG TIME. Gone will be this wimpy backbone to my static site, in will be a full WordPress blog that stands alone. I have noticed that my comments are not even being registered now, and none of the comments are even making it to the admin side… I’m done. Within 14 days all this will change. I have been trying to figure this out for a while, but now is the time. I can’t keep blogging away with this… Give me till March 4 at the latest.

Coming Home to Nest (or, My Most Important Post Ever)

Originally Posted February 15, 2009

Today marks a huge shift. For me, and I believe, for Charlottesville real estate. Today marks the official launch of Nest Realty Group, a team of four experienced Realtors who believe that the consumer has changed, the market has changed, and its time that Realtors change as well.

For more than a decade, I have found myself working at start-up companies in information and technology fields. I suppose it’s not surprising then, that I would head for the start-up route again. Each company in which I have been involved has existed in a mature industry, but has changed the way in which the industry operates. From a company that used genetic algorithms to train and schedule employees, to a firm that used simple (it’s all relative) bio-data from premature infants to predict illness before there were any physical symptoms, every company I have helped steer has believed that there is always a better way to do things. Well, here we go again.

Nest is another real estate firm. We will help list and sell real estate. To that end, we are the same as other firms. I’d like to think that the similarities stop there.

Over the next few days, I will be writing far more in depth posts about the ways in which we are different, but I will give you a few teasers here.

  1. No Dual Agency – Would you ask a Divorce attorney to represent both you and your spouse in your divorce? No. Then why would you believe that a Realtor could represent two sides of the same transaction? They can’t. In my posts in the next few days, I will delve into this more fully. Do I need to be at Nest to refuse Dual Agency? Absolutely not. In fact, I have never worked a deal as a Dual Agent, and I have been very forthright from the start of my career that I have no intention of doing so. Then why Nest? Because we believe that as a firm, our outspoken stance on rejecting Dual Agency will be an asset that Clients will recognize, and it will be a first step in establishing a higher standard for all ethics in our business.
  2. Experienced Agents Only – We are not a training firm. We are not designed to handle hundreds of agents. We don’t want to. We have built our Nest to house only the best, and only experienced agents. All of our team have been in the business more than three years, and within the next few months, we will all complete our Brokerage license. It is a company policy that anyone who joins us down the road will have similar experience and will already have or will pursue their Brokerage license as well.
  3. No Part Time Agents – Nest Agents will not be involved in real estate as a side business. We believe that Realtors who are not fully vested in the industry do their clients a disservice. The value that a Realtor brings to a transaction does not come from simply having a license, it is developed over years of learning every detail of a market and being able to interpret trends from that information. When a Client hires a Nest agent, they will know that their agent is committed to them fully, not just when they are off duty from another job.
  4. Technology – A quick look at our web site www.nestrealtygroup.com will point out that we are different. Clients can find information on listings, but not by stumbling through generic user interfaces. Our clients will be able to begin with maps, or schools, or neighborhood features, or price. Our searches can be saved, and they can be meshed with school information and proximity to shopping… and yes, even the closest vineyard.
  5. Marketing – I can’t go into too many details here, as we are still working with some providers to ensure that Nest does more to market properties than any other firm in Charlottesville. PERIOD. Consumers are changing, and we want to ensure that we are targeting every conceivable market that we can. This means using the MLS, as well as a plethora of on-line services from REALTOR.com to Trulia, Zillow, and about 20 more. It means utilizing social media in ways we may not yet fully understand. It also means revamping the way we think about advertising media that we have been using for decades. Print ads are dead, but that doesn’t mean the only place to advertise is on-line. More about this later.
  6. Transparency – I work for my clients. It’s that simple. Anything I do in the course of business should be an open book. When they make an offer on a home, I will share with them all the information I have analyzed in helping them understand the market. I will share my marketing plan, showing information, everything. There should never be a question as to what I am doing to work FOR my client.

So, here we go in a new direction. I can’t express to you how excited I am to be doing this. For years, I have been writing about ways the industry needs to change to accommodate the consumer. And now, I look forward to being part of that change.

I can’t say where the industry will be in 5 years, but I can’t tell you without a doubt, it won’t be where it is today. We are in a rapid fire time of change; one that should excite consumers and Realtors alike. I can’t wait to change, and I can’t wait to see how the consumer asks me to change.

Welcome to our Nest!

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