SAN FRANCISCO — It’s no secret the housing market is slowing, said Tom Dobron, president and CEO for Innovative Communities, a builder based in the San Diego area.
The company, which has 86 employees, plans to take advantage of its small size and agility to successfully navigate the transitioning real estate market, he said.
Dobron is among a group of about 34,000 industry professionals who are attending a builders’ conference this week at San Francisco’s Moscone Center.
They come here to network, catch up on the latest construction and buyer trends, sharpen their knowledge, and view new products and innovations for their industry.
While all builders will feel the impact of a slower housing market, Dobron said the lull will allow builders to catch their collective breath after a frenzied spell of sales.
“You couldn’t even build the homes fast enough. The sales were so far out ahead of construction, it didn’t even make sense,” he said.
Now, the market has allowed construction to catch up with sales, he said.
The company has a diverse range of projects and isn’t pigeonholed to a particular property type, which will help it weather the slowdown, Dobron said.
Meanwhile, some of the larger public builders “are cutting and running a little bit” from some slowing markets.
Innovative Communities focuses on projects in southern California, Nevada and Arizona. Last year, the company developed and sold more than 1,000 lots. The company builds everything from entry-level, single-family detached projects to high-end condo projects.
The company has current projects underway in La Quinta, Calif.; Bullhead City, Ariz.; and Lake Las Vegas in the area of Henderson, Nev. Innovative Communities builds in some markets where there is little competition from major builders.
Dobron estimated that about 70 percent of the company’s units are geared toward entry-level buyers.
A major issue for the industry is keeping down construction costs — and as materials costs have risen that has added pressure to decrease labor costs, he said. “We recognize the need to drive costs down.” Subcontractors, too, he said, need to cut their costs to help builders stay competitive.
He expects the housing market to rebound in early 2008 as demographic trends take hold and begin to drive the industry again.
“The baby boomers — that freight train is coming. There will be a lot of demand by 2008,” he said, with the “echo boomers” close behind.
Meanwhile, Sean Richardson, vice president of design and planning for Jeffrey Demure & Associates, an architectural and planning firm based in El Dorado Hills, Calif., has seen a rising demand for multi-story, small-lot residential projects.
High land costs and buyer demands for affordable housing are driving the need for more compact development, he said.
“We’re seeing a lot more high-density … to get the most out of the purchase price. The company has designed homes on 40-by-90-square-foot lots down to 25-by-65-square-foot lots, with homes ranging in size from 1,100-2,300 square feet.
Richardson’s firm has seen a demand for three-story row homes, which are detached but may be separated by only about 3 feet or 4 feet from the home next-door.
“A lot of times we are going for a rezone or variances to make it work. Cities aren’t set up for that kind of lot,” he said.
These types of projects cater to first-time or lateral buyers, with fewer empty nesters seeking this product type, he said.
Interconnected kitchens, dining rooms and family rooms tend to be the center of activity in these homes, Richardson said, while living rooms have vanished from floor plans.
Single mothers with kids are a big force among buyers these days, he said. Also, there seems to be a trend with unrelated people not in a relationship who are buying and living in homes together.
Despite the non-traditional trends in single-family construction, Richardson said buyers are seeking traditional “Main Street U.S.A.” architecture, such as steps leading up to the front porch.
And they want each home to look different than their neighbor’s home, even if it is a large subdivision. “It’s not the bland vanilla we’re used to seeing,” he said.
George Lebedeff, a former building inspector for the city of San Francisco who now works as a consultant on high-end amenities for custom-home builders, said home entertainment centers, outdoor saunas and opulent frescos are in high-demand for purchasers of luxury homes.
Custom-home owners want low-maintenance features, such as tiled bathrooms and long-lived roofing materials, he said. They seem less interested in maid service these days, he noted.