From Trough to Peak and Back

250 opportunities to report on U.S. home building; the magazine has borne witness to several economic cycles that have impacted the nation’s home building industry.

By Nick slevin

In the late Summer of 1990, the savings and loan crises was raging on. Deregulation of lending standards, overdevelopment, rising interest rates and a reduction in reserve capital requirements added fuel to the fire. Home buyers were scarce and builders were already worried. Against this backdrop, the first edition of Builder and Developer magazine, volume 1, number 1, was born. I remember telling myself, “if this magazine has legs and is viable then it won’t matter if we jump into a down market, or not.” I guess it pays to trust your instincts. The two-color, newsprint formatted magazine quickly moved to four-color newsprint by issue two.

By issue five we were printing on glossy paper — the good stuff. Advertisers began to show up and we were off. For the first two years our offices were a desk in the corner of the living room I shared with three smelly Kiwi team mates from the local Newport Beach rugby club. We finally moved into a proper office in Newport Beach, Calif., in 1993 and California State University, Long Beach School of Journalism helped out with the editorial content. We shared one Macintosh computer, which did everything. Multi family home building was really starting to move across the country, growing by as much as 74 percent within a year. I was starting to become a fixture at Building Industry Association (BIA) Orange County meetings. We grew the audience from initially just Southern California to include all of California, Nevada and Arizona’s home builders too. We also added residential architects and related industry professionals, along with the home builders we met at shows like PCBC, BIS and the NAHB show.

By 1996, the industry was beginning to recover and home price appreciation was on the rise. Construction quality however, was not. As home prices quickly appreciated, construction defect lawsuits began to appear, like cracks in the driveways on the nine and a half year old sub divisions favored by the ambulance chasing attorneys drawn to this type of litigation. It took a while but home builder Mick Pattinson, from The Barratt Group managed to steer SB800, the “Fix it Bill”, through the California Legislature with the strong assistance of CBIA. In 2002, legislative relief was finally afforded home builders by this important bill. The law provided home builders the absolute right to repair problems that may arise in the home.

Home builders were beginning to realize big opportunities up-selling customers with options and upgrades by 1999. Buyers of new homes were encouraged to customize their properties with various additions and enhancements, which would then go on the mortgage. These ranged from granite counter tops to swimming pools and everything in between. We launched our second title, Options For Today’s Fine Homes at the SoCal Awards. The magazine celebrated the design community and as production builders started to borrow from their custom builder cousins, some of the same great model merchandising trends we see today were created. Along the way the magazine flourished and we began publishing Options bi-monthly. In the meantime, the mortgage community declined only 14 percent of all applications in 2002, half the number declined in 1997. Ominous stirrings began to be felt across the industry as lending standards declined. By 2004, American home ownership had peaked at 69 percent. Some parts of the country were experiencing 25 percent annual appreciation in property values by 2005. Baby Boomers began to head toward retirement and almost 10,000 Americans were turning 55 every day. It was decided the time was right to develop a magazine for this very interesting class of home owner, so I joined the then Senior’s Housing Council and launched 50+ Builder magazine. Among my colleagues on the board were John Burns from John Burns Real Estate Consulting and Manny Gonzalez from The KTGY Group, Inc. Some folks thought we should have named the magazine “Retiring Boomer Builder,” but thankfully, we did not. With a growing roster of home building specific titles we were pleased to find our audience across the country and to showcase quality new home communities of various types and across all categories, including multi-family for rent.

Homes continued to cost more everywhere in the country but a movement towards a more sustainable approach to home building with more energy-efficient homes was taking shape. The green home building industry had arrived and with it in 2005 our fourth title, Green Home Builder magazine was born. In 2006, we launched a magazine directed at the smaller volume production home builder, custom builder/ remodeler and specialty trade contractor community called Residential Contractor, just as the storm clouds were gathering overhead. Almost 2.5 million new homes were built and sold that year.

By the end of 2006 the storm was coming ashore and hitting the beach. The booming housing market halted and price declines began to appear for the first time in a generation. By 2007 the foreclosure crises deepened as subprime mortgagees began to default in droves, further eroding new home construction and sales. Since then, the U.S. home building business has suffered some of the most significant declines affecting any industry segment in the modern era.

In 2011, new home sales of fewer than half a million units. In 2012 we have begun to see the long awaited recovery in housing begin to take shape; the news has been very solid all year long. Builder confidence has risen from 16 to 40 from a possible 50 inside a year. Permitting activity, an early indicator of construction, has risen fairly dramatically. Interest rates are at an all-time low. Mortgages financing remains a struggle.

There are significant headwinds certainly, however 22 years in the home building industry has taught me a thing or two about resilience and about the overwhelmingly positive nature of home builders. A uniquely likable community of business people unlike any other industry. There are talks of a million new homes being built and sold in 2013. Whatever the numbers may be, Builder and Developer and her sister magazines from Peninsula Publishing will be here to share all of the successes with our readers around the country. As we mark this milestone 250th issue of our flagship publication, I remain extremely grateful for the continued opportunity and humbled by our industry and the great people who continue to strive to deliver the promise of home ownership: the ultimate American dream.

Nick Slevin is publisher and editor-in-chief at Builder and Developer. He may be contacted at nslevin@penpubinc.com.

Leave a Reply