Monday, July 20, 2015

The Reality of Pent Up Demand

What if you threw a party and everyone shows up. On Saturday (July 18th) I was shocked. To be honest it was more than a shock, it was a total smack upside the head. For those who have doubted the reality of the marketplace and the demands that high prices and low production have on housing, only had to be with me at the Trilogy Vineyards community in Brentwood, California. What happened Saturday was more than just an open house, it was a full-fledged storming of the castle and taking siege.

Trilogy at the Vineyards (GO HERE) is a resort type active adult master planned development about forty miles east of San Francisco. It sits near the Sacramento River (five miles north), within the eastern hills below Mt. Diablo, and is about an hour and a half from Sacramento, and an hour from Stockton. My land planning and landscape architecture firm has been working with Shea Homes (parent of the Trilogy brand) for more than ten years on the project. The community’s market is about fifteen million people that stretches from Santa Clara County to Sacramento County (and in reality, much farther). The community has a first class clubhouse and recreation facility, great tracts of vineyards that roll right up to the back doors of the homes as well as extensive olive groves – one could believe they are in Tuscany.

The Opening
For the last three months Trilogy Vineyards (Go HERE) has been marketing their new models (at least five new plans designed around the active adult market)—single story with a master down, high-end fixtures and appliances, well decorated, and considering the Bay Area market – very reasonable ($650,000 to $900,000). Extensive on-air radio time was purchased and even Masterpiece Theater on Sunday evenings was not missed.

I don’t have the final numbers but by the time I arrived at 12:15 Saturday more than 1500 people had arrived (or more) and my guess is that more than 4,000 prospective buyers or interested parties walked through the complex that afternoon. It was also an event that showed off Brentwood, the medical clinics and emergency services, restaurants, local cultural, to dispel the rumors about living out in the far reaches of the Bay Area. A first class job all around.

The active adult (over 55 but really over 65) is a rich market both literally and figuratively. We/they are all in the same boat: How do I get the equity out of my home and still remain in the region and not be required to live in some dumpy little 1,200 s.f. apartment with a bunch of whiney thirty-somethings living next door. We/they deserve better and this is the type of project that may appeal to us/them. The turnout seemed to prove this. While the conversion rate may be low, the exposure is unbelievable.

The active adult residential market that is in dire need of expansion and growth. The impact of the these types of projects roll through the residential marketplace, these projects usually free up housing stock that is closer to jobs and urban centers. This market—the baby boomer—has longs legs and will be growing for the next ten to fifteen years. It’s time that more builders get on board.

Stay Tuned . . . . . . . . . . .

Sunday, July 5, 2015

Just Another Brick In The Wall

Construction is changing, especially in the housing industry. There so many technological advancements it’s hard to stay ahead of what idea is next, which one works, and where they will lead.

This article (posted in Gizmag viaBuilder Magazine – HERE) shows the recent development of a brick laying machine that can speed the construction of a home’s basic construction by almost 20 times. Hydraulically enabled and laser controlled the machine can build continuously without coffee and lunch breaks. Of course the real issue is human capital—what is the impact. My guess minimal. There are fewer and fewer people going into the construction industry (no matter what the wages), the physical impact on the human body and the often cyclical nature of the job, makes the decision to be a brick layer or framer or even a roofer, very difficult. Many, after a certain age opt out, or as was found in the last downturn, returned to Mexico (taking their skills with them). The new employee, now with a gaming and technological skills and years playing SimCity, may find these machines to be the answer.

We’ve had machines that build roads for years, this is a quick video to give you an idea as to how fast these things can work.
You want it in Brick?

3D Print Your Home
The future may be to 3D print your new home. Here are a couple of videos to give you an idea of what is coming.

The home building industry has tried for years to develop affordable manufactured homes. The idea, since the turn of the 20th century and catalog kit homes, was to pre-make the house and send it to the job site. Every idea has been tried, from complete modular homes, panel construction, component (pre-built bathrooms and kitchens), and now 3D printing. Costs and profitability will drive the direction of these technological changes. Concrete seems to be the primary building material (it can be easily extruded), but considering the exploding robot technology it can be assumed that, in time, a load of lumber (pre-cut and bar coded) will arrive on a job site, the robot will scan the lumber and building components, align and then manufacture a balloon frame house. Easy-peesy.

We are at the beginning of a new and dramatic shift on home construction, the bigger issue will be local approvals and the weight that the building trades can bring to bear on the these politicians—politicians who are already stressed under the pressure for more affordable housing (see subsidized) and the needs of the public. It will be a bumpy ride.

Stay Tuned . . . . . . . .