Large or small, dedication unlocks success
Jennifer Podmore Russell
Sun
As it stands, B.C. is the most expensive province in which to live in Canada. The reality is that Vancouver real estate, although costly, is showing no signs of correcting in the near future. This has led many of us to tailor our housing needs to urban living and/or embrace the working commute.
Today, more than 540 developments currently have suites available for sale in B.C. Last year, more than 750 developments sold their last homes and completed construction, turning over more than 32,000 keys to purchasers without incident. These homes were built by more than 400 developers/builders provincewide.
The overall sales dollar volume may have dipped in the residential market in B.C. in the first quarter of this year, but the Vancouver market continues to perform at a very steady pace. While we are not seeing the same sales volume as in years past, we continue to see developments sell out prior to completion of construction at similar — if not higher — values to that of the mid-year 2007. Regardless of the cooling resale market, we continue to be in a strong housing market for the year to come.
With more than 400 developers creating products in B.C., where do buyers start when doing due diligence in a bid to select a company to invest in? One of the first questions that comes to mind: are smaller developers as effective as larger developers? Essentially, does size matter?
An oversimplified and naive answer to this question is yes.
Larger developers are able to capitalize on greater economies of scale; they have teams and the experience in place to help deliver homes to owners on time and allow them to manage their budgets more efficiently. Bigger builders typically have more staff members to help with such things as customer service. They also have a larger track record, which one can reflect on to gauge their ability, dedication and credibility.
However, the oversimplified answer is not completely accurate and negates some of the amazing work of other key players in our industry: smaller and newer developers.
I believe our industry remains healthy and continues to produce quality products because of the diversity of groups that make up our development community. Most developers — be they large, small or new — spend hours, if not days, sequestered in rooms improving home layouts, looking for better efficiency and obsessing over what their homeowners would want. Whether they are building 50 homes a year, or 1,000, this is common practice for every successful builder.
With dedication, integrity and quality of construction all being a part of the cost of entry into business today, how do we sort out the best of the breed?
To start, look for a developer who is a true homebuilder. A homebuilder maintains control of the entire process of development from acquisitions of the land, design, construction and after-sales service. Homebuilders are more likely to understand and manage their construction costs, monitor their stock and safeguard against oversupply. Homebuilders are long-term thinkers who are prepared to stay in the market through thick and thin.
It is also important for prospective homebuyers to look at the individual behind the company. Contrary to popular belief, the motivation to become a developer — or homebuilder — is not driven primarily by the promise of financial gain.
In fact, nearly every developer that MPC Intelligence speaks with becomes more lively when discussion turns to topics such as opportunities afforded by urbanization, the future of the region, and what makes a better community.
Developers strive to establish their companies with a distinct purpose or mantra, be it difference through design or exceeding expectations or by simply being a developer with a difference.
When asked why he had not grown his company more over the past eight years, one developer said the company had built its success through the creation of an amazing corporate culture.
While they would love to be building twice as many homes, they were not willing to do that at the risk of altering the team dynamic fostered throughout the years. To continue offering customers the same level of service, they felt it was important for the company to stay the same size until the team was able to adapt and grow together.
This builder founded the company in 2000. In its first year, the group built 15 homes. Growing steadily each year, it now expects to sell 350 homes in 2008. The developer has chosen to pace the company’s growth to continue offering and delivering the same promises it did when it started building.
In 2001, when this developer built the company’s first couple of homes, the organization was relatively unknown. To some, investing in a “no name” developer is viewed as careless or a potential risk. However, in this case — as in many of these cases — consumers need to look past the name of the company and research who stands behind it. The new and small guys on the block often have years of industry experience and are branching out to deliver a type of service they can be personally proud of.
At the end of the day, it is about the person behind the development and the company. The successful homebuilders, regardless of company size, take pride in ownership. By researching the principals of a company, a buyer can better understand the developer’s expertise and history.
Many new builders come from long careers, working with some of the most established master developers in the industry. In short, they have learned from the best.
Other established developers have chosen to never grow from a determined size. One Fraser Valley homebuilder, in particular, has diligently remained a builder of 50 to 75 homes per year since the mid-1980s. By his own admission, his operation has no motivation to grow to a size in which the owner cannot personally oversee the process of every home he builds.
Overall, B.C.’s development industry is full of true professionals whose credibility is easy to research.
Organizations such as the Urban Development Institute and the Canadian Home Builders’ Association have requirements for membership that establish credibility and demonstrate support from others in the industry.
Furthermore, all homebuilders have standing testaments to their work throughout the region; even the smallest homebuilders will take pride in showcasing their craft or directing buyers to homes that demonstrate their ability.
So investing in a home by a large, small or new developer is really a matter of preference for the consumer. It is no different than choosing what type of countertop, cabinet or flooring we want. Some consumers prefer to know their development company’s principals by name, while others will find comfort in investing in an organization with established systems and infrastructures.
What matters, what cannot be replaced or compensated for, is the integrity, dedication and quality of work that a group can demonstrate. This is where the homework starts before beginning the buying process.
Jennifer Podmore Russell is a principal with MPC Intelligence, which records and circulates new-home-project numbers and trends.
© The Vancouver Sun 2008