Among the buzzwords circulating in home building circles these days are “customizing production homes,” which sounds like an oxymoron when you think about it.
Production builders are those residential construction players who rely on repetitive floor plans and materials to generate efficiencies of scale. While they’re sometimes criticized for churning out cookie-cutter communities, production builders make new houses more affordable.
Now these builders are jumping on the customer service bandwagon. Flexibility is a key theme as builders woo buyers with options and upgrades: gourmet kitchens, media rooms, bay windows, thematic elevations, knocking out walls, expanding rooms and building over garages.
In the past, consumers rarely had a say, even in the matter of wallpaper, experts agreed.
This new flair for flexibility is linked to a couple of things: a slower economy and more demanding consumers.
“The ’90s are about value-oriented consumers-I don’t care whether it’s cars or houses or the film industry,” said Roger Mankedick, a principal with Mankedick Dompke & Leibson Inc., an Arlington Heights-based consulting company. “Production builders are trying to build in value by giving more service.”
Ahead of the curve? Not really. Home builders have lagged behind other industries, experts said.
“People are used to having more choice in all their products. . . . Builders have to accommodate,” agreed Don Anderson, president of Color Design Art, an interior design firm in Pacific Palisades, Calif.
The personalization of production houses began in the East a couple of years ago, said Chris Lessard, head of The Lessard Architectural Group in Vienna, Va. A tough economic climate prompted builders to figure out new ways to move their product, Lessard explained.
In Chicago, where the housing market has been stronger, production builders haven’t really tested the waters of customization. Until now.
Oakbrook-based Town & Country Homes, one of the few firms aggressively promoting customization, has created a program of options called “Custom Choice.”
Currently, Custom Choice is available to buyers at the firm’s Elysian Fields development in Gurnee (where base prices range from $147,900 to $207,900) and at Cider Creek in Bolingbrook (where base prices are $131,900, to $194,900).
There are two pre-priced packages, but options are also offered a la carte. To date, more than 90 percent of home buyers have taken some type of Custom Choice option, according to Town & Country.
Sandra George, who bought at Elysian Fields, took advantage of Town & Country’s gourmet kitchen upgrade, as well as converting the three-car garage into a two-car garage with an office. “There were also little personal needs we asked for and were accommodated,” George said. “We have a son who’s 6-6 and asked to have tile put up closer to the ceiling.”
Ryland Homes doesn’t offer a designated program, but there has been increasing emphasis on flexibility for the past two years, said Tom Gancsos, vice president of the builder’s Schaumburg-based operations.
“In the old days if a buyer wanted to have something changed, the answer would have been `no,’ ” said Ganscos. “Today we’re trying to accommodate the buyer . . . to take his idea and see if we can do it.”
“Most of the stuff is small . . . a home office needs extra lights and circuits,” said Mike Schall, vice president of sales and marketing for Sundance Homes, a production builder in Rolling Meadows known for offering consumers more choice.
Both Town & Country and Sundance will convert one of the stalls in their three-car garage to an extra room. “We’ll make it into whatever you want-a den, a workshop,” Schall said. “We can’t move foundations . . . but with interiors, we can do a lot.”
Colin Carroll, another recent Elysian Fields buyer, is having a wall knocked out of his kitchen to open it up another two feet. “That doesn’t sound like much, but it makes a big difference,” Carroll said.
The options game is part revolution, part evolution.
“It’s a matter of depth,” said Brian Huehls, vice president of architecture at The Drees Co., a production builder in Fort Mitchell, Ky. “If you agreed to make one or two changes before, now it’s 10 or 12.”
The Drees Co. is somewhat of an anomaly, offering options since the ’70s, Huehls said. But the company also has expanded its portfolio of options in recent years, with some 50 changes possible today.
“In the past we’ve offered flexbility . . . just not to the extent we are now,” agreed William J. Ryan, president of Town & Country Homes.
But this is no free lunch. Customization costs more, driving the final price tag up anywhere from a couple hundred dollars to thousands.
Still, production builders have geared up from the start to make changes, so costs do not go up dramatically for consumers, said Dave Stone, head of The Stone Institute, a market research company in Los Gatos, Calif.
Experts say customization is no passing fancy.
“It’s becoming more pervasive very rapidly,” Huehls said.
Generally, production builders start offering options with homes base-priced above $200,000. But many are offering choices on homes priced as low as $120,000.
Some say customization recognizes consumers’ quest for individualism, a key theme of Baby Boomers. “People want to make whatever home they’re purchasing . . . respond to their lifestyle, not somebody’s idea of it,” Lessard said.
Certainly, today’s home buyers are splitting into more market niches. Ozzie and Harriet home buyers (two parents, two kids) are not the norm anymore, points out Randall Lewis, executive vice president of marketing at Lewis Homes in Upland, Calif.
Today’s buyers are composed of single parents, singles, cohabitating couples, empty nesters and others-each with different needs.
Customization is “about trying to think how to meet the needs of all these buyers and remain a volume builder,” Lewis said.
Buyers are also more demanding because they are staying in homes longer, Stone said, a trend he chalks up to downtrending market values.
Staying longer means a longer list of demands. Consumers are looking for homes that are more “flexible and desirable,” he added.
Production builders are able to meet demands better today because more architects have delved into the volume ranks, experts said.
Also, economies of scale are made possible with technology, including computer-aided-design (CAD) systems.
Technology also is showing up in the sales office. At Elysian Fields and Cider Creek, consumers can use a touch-screen computer to make changes on floor plans. “Walls disintegrate right before your eyes,” said Amy Osborn, Town & Country’s director of marketing. Later on, consumers will be able to see changes made to the exterior, she added.
Yet the options game has some downsides. While technology may offer design efficiencies, executing new options requires more supervision and adds to labor costs.
“It’s a management nightmare even for the smallest company,” one industry observer said.
“Every time you make a change from basic plan you run the chance of mistake or slow down the production,” Stone explained.
Basically, production builders are doing what the semicustom folks have been doing for years, experts agreed.
“Except semicustom builders don’t pre-plan it,” said Denver architect Mike Kephart. By planning for changes, production builders usually know within five minutes what a buyer’s choice is going to cost, he explained.
With semicustom builders, pricing changes takes longer unless they “fudge,” which could throw off their margins.
Experts see production builders cutting into the semicustom market share, but not dramatically. Still, some semicustom players are moving away from the middle-generally up into the custom ranks.
But production builders can’t customize everything, experts say. Even if they could, it would be overkill. Production builders generally deal with first- and second-time buyers, and these folks don’t always know what they want to change.
That’s why planned options work well. “Homebuyers don’t always know what they want to tweak, but if you give them specific choices they can make up their mind,” Lessard said.
“We can’t determine every need, but we can determine a lot of possibilities,” Schall said.
