In Tom Stephani’s view, “small” is the next big thing.
That, he thinks, is where home building will go when housing comes out of its tailspin.
Stephani is a longtime home builder and former president of the McHenry County Home Builders Association who maintained a sideline conducting business-practices seminars for builders and how-to-buy-a-house classes for consumers.
I first chatted with him years ago after I sat in on his seminar for builders that bluntly explained that many of them seemed to be tone-deaf about meeting customer expectations — something truly unexpected in an industry that seemed otherwise inclined toward gee-we’re-wonderful back-patting.
At just about the time the market began its downturn in 2005, he put construction projects on hold and ventured into housing-industry consulting and training — especially on topics related to green home building. And now, he figures, it’s about time to get back into the home building game.
Now? Really? When the Commerce Department is reporting that housing starts have hit the lowest level since record-keeping began in 1947?
Stephani reasons that land is getting cheaper and he’s banking on pent-up demand manifesting itself sooner rather than later. So he’s looking around for lots and for opportunities to get back into his old mainstay — small subdivisions or in-fill projects (a house here and there) on existing lots in suburbs or neighborhoods that have easy access to public transportation. That, he says, is the future of building.
“As a small-volume builder who travels a lot around the country [speaking and teaching], I think the only niche that’s viable is green and small and ‘very nice,'” he said.
He utters the unthinkable: “I think the big house is dead.”
The builder is hardly the first voice in the housing industry to suggest that smaller, well-designed houses can beat out their bigger competition. North Carolina architect Sarah Susanka, for example, gained an ardent national following starting about a decade ago with her books, beginning with “The Not So Big House,” which advocate savvy, sustainable use of space.
Stephani is a Susanka fan, but he says that until recently, pushing for “small” was an unpopular view in his business — heretical even.
“I started talking about this [to industry groups] seven or eight years ago,” said Stephani. “It was not well-received. I was talking to custom-builder audiences, and they didn’t want to hear it — especially those who had made a commitment to build huge houses in developments.
“They were in a state of denial back then,” he said.
But slowly, he said, “green” stopped being “weird.”
“The whole green thing, at the beginning, was interpreted to be some whacko hippie movement,” said Stephani. “Building with straw bales, geodesic domes — that was the vision that somebody would get when I would say I was going to build ‘green.'”
Now, he said, the industry is catching up with popular culture on that front. Next to come, he thinks, is a reconsideration of size.
“Baby Boomers have started to say, what do we need all this [space] for?” he said. “They’re saying it’s hard to justify having this much house, just from the standpoint of maintaining it.”
Plus, he said, they’re looking at their property tax bills and wincing.
At the other end of the consumer spectrum, younger consumers not only aren’t into big spaces, but they’re also insistent on easier access to jobs and daily activities, and thus will gravitate toward locations near public transit, he said.
So he sees, eventually, demand for downsized homes (say, 1,800 to 2,300 square feet), with quality finishes and features, that are near Metra lines in established places such as where he lives in Crystal Lake.
A partner in William Thomas Homes Inc., he sees little demand, for a long time to come, for full-blown, traditional subdivisions. Most of those flunk the access-to-transit test, he said. And for the foreseeable future, subdivisions are going to be competing with the glut of existing housing, which will have an edge because of falling prices.
But until he’s formally back in the building business, he’s still conducting seminars, including some for consumers. On March 5, for example, he’s going to host one in collaboration with Home State Bank in Crystal Lake on why now is a good time to buy or build.
Pardon me for repeating myself. Now? Really?
In Stephani’s view, home prices are too good to pass up. “They might be a little bit lower in 2009,” he concedes, but they’re still a bargain now.
“I truly believe existing homes’ prices have gone below what their replacement cost is,” he said.
But mostly, and unsurprisingly, he sees an upside for building brand-new. “Tradesmen have never been more available and builders never more eager to build,” he reasons. Consumers “will never get the kind of attention to detail that they’ll get now.”
Class dismissed.
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Hear Mary Umberger at 12:49 and 11:15 p.m. Tuesdays and Thursdays and at 10:30 a.m. Saturdays and Sundays on WGN-AM 720. Write to her at: House & Homes, Chicago Tribune, 435 N. Michigan Ave., Chicago, IL 60611 or e-mail housingnews@ comcast.net.
