The Future of Affordable Housing | Christopher Alan Homes’ President & CEO, Ian Schmoyer

Speaker A: You guys have been unbelievably successful. You're one of the top 100 builders in the entire country. When you guys started Christopher Allen Homes in 2017, did you sit down and say, okay, I'm going to build one of the largest home building companies in the country?

Speaker B: I think I fell into it. Uh, it was right after 2008. So the market crashed and we were doing some little business deals like buying fixer uppers and flipping them, and that's all we were doing at that time. We were successful at it, and we continue to grow today. Once we decided, decided to do that, we had to be really specific at what we wanted to do to be successful at home building. We determined that the entry level is one of the largest markets there is. Everybody in my mind deserves a home, needs a home, and needs a quality home. So that was the difference. Hey, can we do it better? We want to make every single person, every home buyer feel like they're getting great value and that they can be proud of the home that they bought no matter what the price point of the home is. I think that's one thing that the industry lacks.

Speaker A: Pursuing. I'm a home buyer in southwest Florida and I come to take a look at the Christopher Allen home. What would I, as a prospective buyer, see and feel that is different from your competitors?

Speaker B: If you walk into our new model in Cape Coral, you will definitely be wowed by the quality of construction and the spec level and just the, uh, emotional feel you get walking into one of our homes. You got to build through the bad markets. You got to just keep grinding it out. You just got to run your business, figure out how to do it well. And, um, that's what we're doing.

Speaker A: Today's guest is on a mission to help people fulfill the American dream. Starting from nothing. In only a few short years, Ian Schmoyer has led Christopher Allen Holmes to be one of the top 100 largest home building companies in the entire country. He's done so by focusing on hiring the right people, ensuring a healthy company culture, a relentless focus on attention to detail, and by doing things the right way. He competes against far bigger, more well funded competition, but he continues to win and continues to grow. This guy has a fantastic story. You guys are going to enjoy listening, listening to it. Boundary breakers is brought to you by Carter and Clark. Ian, thank you so much for being here. I'm curious, curious about your background, like where you grew up and stuff. Can you share with us your origin story?

Speaker B: Yeah. So I was, uh, I was Born in Winter Park, Florida. I grew up in southwest Florida. Went to, you know, Allen Park Elementary, Fort Myers High School. So I'm a Florida native. And it's great, especially for this business, because I got to see southwest Florida especially change over the years. And my father, when he was alive, was a large real estate developer. So I was always around business in the background and got to see some big business deals, big land deals firsthand. So it was great. It was great to grow up around that. But, you know, my background primarily was I was an athlete. I wasn't much into school. You know, I. I thought I would be playing professional baseball one day. You know, I had kind of a unique story. I got to travel the world surfing for. For many years. My father was a. He was huge on education in terms of his background, and he always pushed me that way, but he also pushed me to kind of be my own person. Uh, so I was lucky with that, that, you know, he taught me, I think, a lot of great life skills, but he never pushed me in any one direction. He just wanted. Wanted us to be happy, you know, just moving, moving forward to today. You know, it's probably late in my 30s, you know, I. I just didn't really have the drive to go into business. I wasn't quite sure what I wanted to do yet. I was still probably having a little too much fun, still traveling, still surfing. And then my father passed away. And that, that kind of is when it clicked for me that I needed to grow up really quickly and I needed to prove myself, you know, one to him, but. But to myself. And this is what I could do, because I never felt that I was not capable of doing something. Uh, I just wasn't ready. And, you know, I think in today's society, you know, I, I probably waited a little too long, but in today's society, you know, you go to high school, they put you into college right away, and, you know, you're 18, 19 years old. And I don't think anybody really wants to know exactly what they want to do with their life at that point. So I was lucky. I got to. I got to see a lot of things around the world. And, you know, I think it helped shape who I am, what I stand for, and kind of the way we run our business.

Speaker A: I love that. I love that. So it sounds like, I mean, you weren't, you didn't have a conviction from early on that you were going to go, you were going to be an entrepreneur, you're going to do it in real estate. What Was it that that sort of when your father passed away, that, that pushed you in the direction that you went?

Speaker B: I think I kind of fell into it one, uh, because I did know a little bit about it from learning from him and being able to see it. And I had contacts in that industry, which made it a little easier. So we're kind of sitting around and just thinking like, what can we do? And, and prior to an impasse and, or uh, right when he passed away, we were, we were kind of buying, you know, it was right after 2008, so the market crashed and, and we were doing some little business deals like buying, you know, fixer uppers and flipping them, you know, and that's kind of all we were doing at that time. And we, we were successful at it. I just knew in the back of my mind that that wasn't going to be a long term viable business. So I had to think of something. So we started a shell company. And that shell company doing concrete and framing was very successful for us. We realized we were really good at it. And again, through a lot of contacts I had, we just went out and sold to, you know, all these, all the people I knew previously from my father. And then from there it grew. So from that point in 2017, I decided to keep compete with them. You know, I had my own reasons for that. But, uh, it was a good call on our part. And we continue to grow today. And we're, you know, one of, uh, Southwest Florida's largest private builder and we're growing throughout the state. But I never really thought I would be in this home building industry.

Speaker A: I mean, so you guys have been unbelievably successful. I mean, you're one of the top 100 builders in the entire country. So I'm curious, I mean, did you, when you guys started Christopher Allen Homes in 2017, did you sit down and say, okay, I'm going to build one of the largest home building companies in the country? Or did you say, look, I'm going to build a company. We'll see where it goes, or we'll, you know, I'm not worried about, you know, what the end looks like. I'm just going to do it the right way. Walk us through sort of what the plan was.

Speaker B: Yeah, so I think, uh, originally I was a little nervous about entering the home building space because I didn't want to lose the contracts that we had with the other builders because all of a sudden now we're going to start competing with them. So are they going to fire us because we're competing with them. What if the home building company doesn't work out? So all that was running through my mind. But we kind of, you know, lgi, I think was a good example, uh, of how we got started in the entry level homes. We, we like their business model in terms of it was very simplistic, not a lot of changes. You know, focused on entry market, which I absolutely love. Once we decided to do that, we had to be really specific at what we wanted to do to be successful at home building. And we determined that, you know, the entry level is one of the largest markets there is. Everybody in my mind deserves a home, needs a home, and needs a quality home. So that was kind of the difference, like, hey, can we do it better? And that's what I started thinking about, like, how are we better and what can we do to make the company better? So we're just not another typical home builder. And, and I thought the, the scattered lot market, which we, we started in, was a great way to do that because it was very hard to scale the business in scattered lots. Like anybody can go buy a lot and build a home, but to actually scale it to, to have high quality to, you know, make money at was tough. But, but we got it down to a pretty good science.

Speaker A: And so, so for the listener that may not be as familiar with with home building, by scatter lot, you mean, uh, you could go do sort of the production homebuilding where you build a, you buy a larger piece of land and subdivided into a bunch of lots like a subdivision or neighborhood or scatter lot, meaning you're picking off 1, 2, 3 lots here and there and building where you can. Right?

Speaker B: Absolutely. So take Kit Coral for instance. It's a huge scatter lot market and you may build one home and uh, the other home you're building is a mile down the street. So the logistics are a little different. It makes it a little more complicated than just going right down the street in a community. But, but we figured it out and we do very well. And you know, the biggest thing, uh, I think in, in the entry level business especially is just providing quality specs, quality home. You know, we want to make every single person, every home buyer feel like, you know, they're getting a great value and that they can be proud of the home that they, they bought, no matter what the price point of the home is. And I think that's one thing that the industry lacks.

Speaker A: I totally agree. So I want to spend some time on, you know, the, the what you touched on a minute ago about what makes your company different and, you know, similarly, how you've been able to grow a successful private home building company given, you know, a lot of the bigger players and just sort of the, the industry as a whole help us really understand what makes Christopher Allen successful.

Speaker B: Yeah, I think our, our success, number one, comes from our people. And I think that's kind of, you know, our, our big advantage is our people have a lot of heart. They truly care. They truly, they truly believe in the vision of the company, which the reality is it's quite simple. Just be better, you know, that that's really what we want to do. So, so our people definitely make our business and then that translates into our trade partners being better and then, uh, ultimately to the homeowner, every single person that works here cares deeply about our trade partners, about each other, on our team, and about our homeowners. And I think that's the difference. Like, we, we don't report to Wall street, right. So we report to the person sitting next to me in the office and to the homeowners. And I think that's the big difference. And we can, we can compete well, uh, against the, the big guys. Maybe not from a balance sheet perspective, but just from a, uh, customer service perspective and, and a quality perspective. And that's what we focus on. The fact that my people love to come to work every day. They're going to do better, they're going to try harder, and that'll ultimately transfer into the product to the homeowner. So culture, culture is a big thing here. It's, it's a people business, and we're in the customer service business, I believe, above all else. So a lot of, a lot of the big guys, you know, they'll, they'll tell you they're, they're in the manufacturing business or they're in the finance business. And I just don't believe that. And maybe I'm wrong, but that's just not the way we're ever going to run our business.

Speaker A: Yeah, no, it's, it's admirable. What, what I find can be very difficult is, you know, it's not like when you're trying to bring somebody on or try to hire somebody on a team, regardless of the, the role. You know, it's not like they come with some type of thermometer or score sheet that's like, this is a great person. This is not a great person. Okay, now, uh, you know, how, how do you sift through everything and determine who the, you know, good people to Bring on are. Yeah, we'll start with that. Like, I mean, how do you sort of select for the, the great people that care?

Speaker B: I, uh, think that's been one of our, our struggles is hiring from outside as, as we grow, you know, thinking about what else we need and do we need somebody from that was a division president at a big national company, you know, and we've tried some of those. And what I've found works best is, is growing from within people that actually come from the field for the most part and work their way up. They understand the business, they understand people. A lot of corporate executive types, I just don't feel that they always understand people. They understand process 100%. They understand the business. I'm not saying that. And they fit in in certain organizations where we, We've struggled with some of that. Because what I've found is a lot of them say they're, they're tired of the corporate culture and they, they want to do things differently, but then they, they try to bring that same corporate culture with them. Yeah, so, so that has been a struggle for us. And it's something that we're definitely guarding very tightly as we grow in who we hire. And I found that we just have to be, I think, even more openly transparent about who we are and how we, how we run the company and what we expect in that, in the hiring process. But sometimes you just don't know until you hire somebody and you see, you know, who they are and how they, how they work with the team. Yeah. And don't get me wrong, look, we, we have plenty of processes. You know, you need processes as you grow to do well, to be consistent and predictive or predictable. But you can't let processes overtake your, your company. Right. Like it's, it's a people business. I would much rather have really, really good people that can solve problems because there's problems every day in this business. Right. And you have to be able to think and solve problems. And those are the people that I love. There's not a process that can solve every, every single issue we face today.

Speaker A: Yeah, I tell. Look, I totally agree. And I'm convinced that, that every, regardless of the industry, every business, when it really comes down to it, is a people, people, people situation. Right. I would agree to your exact point. You could write, you know, we, you, we could get Harvard PhDs to write the world's greatest processes, uh, and procedures, but something's going to happen that falls in the middle or falls right outside, and it's going to Require a person that's going to have to either interpret it or figure out what to do. And if you don't have those people, you know, you got a problem. But have you found that the bigger that you get, the more difficult it is to keep the. I mean, culture is such a, it's such a, it's almost a cliche now, you know, a buzzword. But to keep the right atmosphere that you, that you have in your heart of hearts about what the vision of the company is, you find it hard to keep that the bigger you guys

Speaker B: get, not the big believer in. You know, we try to run a very flat organization. So I constantly want to hear from everybody in the organization. So to me, uh, a project manager or a superintendent is equally as important as any executive. And they probably have a lot more insight on what's going on in the business than anybody else because they're out there doing it. And those guys take the brunt of everything because we do build homes and they're the ones building them. So I picture the executive team and all, uh, uh, upper level managers. We're just there really to support those guys. And, and I think that's where the more that we show support for them, the better our culture all around will be.

Speaker A: Yeah, absolutely. I, I think that is. Again, that's admirable. How many, how many locations or divisions do you guys have now?

Speaker B: Right now we have three. So we have obviously Southwest Florida, which, where our corporate headquarters is as well. And then we have our Palm Bay division, which we're currently growing all the way up to Palm coast, and we'll continue to grow that division. And then we have Citrus Springs, Okala, Marion Oaks, Spring Hill area. And that's kind of our Northwest coast division for now. And then we'll, we'll expand on that. So those are the, the markets we're concentrating on today. And then the ultimate goal is to expand throughout Florida.

Speaker A: Got it. I'm interested. You. My company's worked with a lot of different home builders, and one of the things that I've noticed is that there's often kind of a mini culture within each division. Right. That, that, that sometimes is sort of, you know, bounded by the bigger sort of larger values or and sometimes is very different than, you know, the division next door, if you will. I'm curious about first sort of your thoughts on would that be okay? Do you feel like that's okay if there's sort of a little bit of a mini culture based off the people in different divisions? Or is it, you know, does it need to be one cohesive culture that is regardless of what location you go to and if so, how in the world do you do that? You know?

Speaker B: Yeah, I think you need to try to be even with everything in the business as cohesive as possible. But there's always going to be little differences, whether it's in the homes or the culture, just because there's, it's a different group running it. Right. So as long as the, the main theme is the same and they understand the overall vision and there's somewhat in, or uh, there are certain things they have to be 100 in line with and then there's other things that they may do a little bit different. But as long as that culture in that division is up to, I guess, what we want and everybody's happy and they're loving it, you know, that that's what, that's what matters most. Right. Because again, that parlays into how we treat our, our trade partners, how we take care of our homeowners and, and that's the real goal. It starts with the team and then it filters all the way through home. Yep.

Speaker A: Yep. Pretend, I guess, or assume I'm a home buyer in southwest Florida and I'm looking in a bunch of different, these different new areas are looking at a bunch of different new construction and I come to visit or take a look at a Christopher Allen home. Talk with us about what would I, as a, as a prospective buyer see and feel that that is different from your competitors?

Speaker B: Well, I think right away if you, if you walk into our, our new model in Cape Coral, you will definitely be wowed by the quality of construction and the spec level and just the emotional feel you get walking into one of our homes. But then right away the, the greeting that you will get from our sales pool. Um, our sales people are amazing. They're what make this business and they're why we have such a great referral rate from, from not only homeowners, but the, the realtors in the community, which is extremely important. This is a, uh, word of mouth and realtor driven business and we have a very good following. They know they can trust us. They know that we stand behind our product and that uh, you know, we typically there's, we're not perfect. And one thing in construction, it's, it's one of the last things built by hand today. So you know, there's always little issues, but it's to me, it's how you stand behind your products and how you fix them. And so we always go above and beyond with warranty. And our realtors friends know that. Partners, they know that. So they know that they, they're confident bringing a buyer to us, that we're always going to take care of that buyer. And, and I think you get that feeling as soon as you talk to, uh, anyone on our team.

Speaker A: Yeah, for sure. I mean, do you. I'm, um, curious if you agree with this. In my opinion, if you see, have you. If you have seen enough new construction homes, it does not take as long as you have two eyes. It does not take very long when you walk into a new construction home to determine whether or not the person or people that were in and around the construction of that house cared.

Speaker B: Right.

Speaker A: Just attention to detail. Right. The little things are things square. Do you feel like in home building there is, you know, an opportunity to. It's not a commodity.

Speaker B: Right.

Speaker A: At least this is. This is what, uh, now, speaking for me, not, not speaking from you, do you feel like it's easy to differentiate yourself from your competitors, or do you feel like you, you sort of get lumped in the bucket and that you constantly have to convince the buyer that you're different and you're better?

Speaker B: I think there's a mix. I think the industry as a whole kind of gets everybody lumped in a little bit. And in the industry as whole can definitely do a lot better. And that's what we're trying to do. So sometimes you get lumped in that. But I think the people that know us and know us well know how much better we are and how much more we care. Because you're right. I mean, look, at the end of the day, it's about making money, but it's not about making money. It's not about cutting corners to make money. Right. So we just do not cut corners. We want to provide a better product. And, and that's really one of our goals. And, and I think the, the overall consensus is that everybody knows that and, you know, one thing. But I'll, uh, tell you one thing I had to learn was you. You can't please everybody. And, and when you build as many and sell as many homes as we do, you're always going to have those few people that you just can never make happy. Yeah. And for sure I had to learn that. Yeah. But we, we try and, and that's all you can do. So, look, uh, our competition, in my mind, uh, I would say there really isn't much more for us now. There is people that are maybe priced a little bit lower, but again, you pay for what you get sometimes. So I would always be careful of that.

Speaker A: Yeah.

Speaker B: Yeah.

Speaker A: So. So how about exactly how many houses are. Roughly how many houses did you guys build last year? I want to make the, the listener or the viewer knows, sort of understand the scale that we're talking with here.

Speaker B: Yeah. So last year we closed, I think 555. So we probably built about 800 homes last year. Yeah. And, you know, so far, I think we've closed since inception, close to 4,000. Right. Around 4,000 homes. And so, so that means I've written. So I write a hand thank you note to everybody that buys one of our homes. So I've written about 4,000 letters.

Speaker A: Wow, that's really cool.

Speaker B: And it's something personal to me just to thank them because, you know, they're in our community and I just think it's important. Right. They're, they're, they're buying a, for some people, the largest purchase of their life. And I think it's important to thank them. They're, they're what makes our business work. Right. Without them and without the, the realtors, uh, our, our business couldn't flourish and we couldn't do things in the, in the community that we want to do right now.

Speaker A: That makes sense. And you know, the, I asked that because I want to make sure that the audience understands that. I mean, particularly in Florida, particularly in southwest Florida, where there it's a hyper competitive market in terms of a lot of builders want to be there. And we're not, we're not talking about a company that, like you said earlier, could buy a couple of lots and build a couple of houses. This is a company that has gone from 2017 to today, has scaled significantly and been very successful given the other competition that is next door. Uh, I think the natural question anybody wants to know is how did you do it? And each of these answers provides a little glimpse into that. Just the fact that you personally write a handwritten note is telling, at least to me, about the differences in the amount of, of how much your, you and your company care about the little things, the details, the experience, what it feels like, what the customer must. The, the, the, the conclusions that the home buyer is coming to as they go through the process. But so how did you come up with the name Christopher Allen?

Speaker B: So Christopher is my middle name and Allen was a former partner's middle name. Gotcha. So gotcha had a great ring to it. So I liked it.

Speaker A: Yeah, Love it, Love it.

Speaker B: You know, one thing we're doing with the company Right now is we're, we're trying to evolve as a builder. So we'll, we'll, we'll always be very heavy in the, in the entry space over trying to move also into the move up and double move up and maybe even the move down and just evolve as a builder. I think there's, uh, I want to take the, the quality and everything that we do so wonderfully well and expand it into some different price points. And so we're focused on that. And I may even start a, a small, uh, custom home company which we're talking about, which I would name after my children. So Christian London Homes, you know, oh, look, look for that in the future. So we might expand into that realm too. But, but our greatest focus is on, you know, the, the entry and, and first move up. I just love that space and it's a much needed market. There's so many affordability challenges today. And you know, one thing is, it's, everybody thinks that, you know, it's the builders making all this money and being greedy today, and that's just not the case. It's, things cost a lot of money. So, you know, it's uh, it's, it's something that needs to be talked about.

Speaker A: Yep.

Speaker B: But, you know, the government definitely isn't helping in the regulations and the costs associated with, with land and entitling land and all those things. So that's, that's probably one of the biggest constraints on affordability.

Speaker A: Yeah. So, gosh, you took me right where I wanted to go next. The, and let me, let me try to sort of paint, paint this picture a little bit from the general public's perspective. I think there's this sort of confusion, right. You've got all of this chatter on one end of there's not enough houses in the U.S. we have a housing gap, housing shortage. Is it 2 million? Some. Is it 1 million? But there's not enough. And so the, the baseline thinking is, well, let's then let's build more. If there's not enough houses or people that want them, why aren't builders building them? Uh, I've got 10,000 thoughts on this, but, uh, you just hit on a very important one, right, which is there could be, you know, an extra million, 10 million houses. But if people can't afford to buy them, then they're not going to do you. What do you feel like is the number one sort of missing piece of information or gap there that the general public needs to know about? If there's a shortage gap, why aren't you. Why don't we just build them?

Speaker B: Yeah, well, I don't know if there's a shortage gap, so I'm not a big believer in that, you know, because then you get into conversations like, okay, well maybe in a certain area there is, but maybe there's a bunch of homes in the area nobody wants to live in. Right? Yeah. Uh, and builders aren't, we're not doing this to not make any money. Right. So we're not going to go build a bunch of homes and not make money. So, so basically what I'm saying is we're not going to over supply to where prices start dropping dramatically. Right. We're going to build where we can sell homes and where, where we feel that they're needed. But the number one constraint to me is entitled land. That's the piece nobody talks about for the most part. That's where the under supply is. If we had a bunch more entitled land today, meaning land where a builder could go out and start building homes relatively soon, land costs, land prices would come down because there's more of it. When there's less of something, obviously prices go up. And I would say the, you know, a huge part of the increase in price today has to do with land. And you know, all the fees that we pay for to the government is astronomical. I mean, I've heard in some states numbers 30, 40% and you know, to. I think it's more around 15% probably here, 10, 15. But I mean that's a, that's a big number. But, but I, I think, I think we have to have more entitled land. You know, so, so the, the government is great. Uh, and, and the, you know, politicians, they're great at saying, oh, we need affordable housing, we need all these things, yet their regulatory policies are the ones that, you know, constantly drive prices up. Yep.

Speaker A: Yeah, I, I find it interesting and frustrating that it seems like the conversation about housing is always at the national level. Right. And they're trying to solve this from Washington D.C. but like you mentioned, the, you know, the real estate market, particularly the new residential construction market, is hyperlocal. And what, what's happening in. I know I'm preaching to the choir

Speaker B: here, so forgive me, but you know,

Speaker A: what's happening in, in one market may be very different than the other, which may be different than San Antonio, Texas, which may be different than Los Angeles. And so the, I think that, I think one thing that the politicians miss is it's that a lot of what needs to happen is not going to come out of Washington D.C. it, it is in the municip. The jurisdictions about permitting requirements and all these crazy hoops that make you guys jump through, but help. Help us understand more about entitled land and, and what could help break some things free there. Are you. Is it just. And I don't mean just to minimize it, but is it a zoning issue? Is it what. What's like the actual sort of bottleneck there?

Speaker B: Yeah, I mean, taking, taking land from AG to call it R1 and being able to have the zoning for a certain amount of units and then getting your development order. Just all those hurdles that you have to jump through to get a property approved to build on, you know, unit count is another big thing. We could always use more density. That's one way to, to help with pricing, although some landowners will obviously charge more for that land because it has more units. Uh, but as a per unit basis, it should drop. That process today takes 12 months to two years. Let's say in certain states it takes five years. To me, that's just incredibly inefficient, especially when we are talking about affordability. So there's a lot of other little nuances that go along with that. Whether it's permitting a home and some of the hurdles you have to jump through with that sometimes inspection co in the home, there's just so much, you know, red tape along the way that the whole process could be a lot easier, which, which would translate to, you know, some cost savings. You know, I'm not. I don't know if it would be extremely dramatic where we would get back to, you know, 2018 home prices, but it would help.

Speaker A: Yeah, that makes sense. And so, so just so I understand it, it's. It's not necessarily that there isn't physical land out there that could be taken from AG to R1. It is the. All of the costs associated with that, that process that then would take it out of the range of affordability. That makes it like there might as well not be land out there.

Speaker B: Is that. Yeah. And, and I mean, I'm sure you, you hear of, of battles that big builders have on certain part, part of land that they want to develop and the community may throw up extreme objections or, you know, the environmentalists or whatever what they are. And no matter what side you're on, though, they talk about both things. So they want affordable housing. That process just takes too long. And what I'm saying is if we had more land ready to go today, land prices would fall, which would help bring home costs down. So I think the real Issue is, is land supply?

Speaker A: No, that makes sense. That makes sense. But it's, It's. Yeah, it's interesting because it's. I think there might be a lot of people that agree with you until it's the land next door to them. And then they, Then you get the. Not in my backyard.

Speaker B: Right, that's. That's typical in Florida. Right. Especially in some of the great places to live, everybody moves down, they want theirs, and then they don't want, uh, anyone else to have.

Speaker A: Right, yeah, yeah. They want to move and then build. And then build a wall so nobody else comes down. Right. Well, I'm interested. So talk to us about that. How competitive is it when it comes to, you know, there's an attractive area or attractive parcel or something that anybody would love to build on? I mean, how competitive is it with, you know, all the other builders? And does it get nasty? What's it, what's it like navigating that?

Speaker B: I wouldn't say it gets nasty, but it's highly competitive today, and you have every publicly traded company trying to get into Florida today. And then there's a huge consolidation happening, uh, in the building space. One of the only ways some of the larger companies can really grow today is through acquisition. So there's a lot of M and A happening. The Japanese are buying a lot of building companies here, so that's happening. So the, the competition is fierce. But I think right now, well, it, it's picked back up again, but for probably the past six, seven, eight months, we've been very patient, and I think the overall industry has been patient, and there's been a lot of retrading in deals that just don't pencil today. But I, uh, think you're starting to see some movement again on deals. It was just land prices got out of control and home prices don't justify those deals anymore. So you're seeing a lot of deals retrace. But we've been very patient. But a lot of the bigger guys, they have to continue to feed the machine, so they'll overpay, which doesn't do anybody any good for land prices. Right.

Speaker A: I could. That's interesting. I could see that for sure. Well, what about sort of your, your, your feeling on the kind of the overall health of, uh, new single family residential construction market? I mean, do you feel like, you know, fundamentally it's in a good spot and that that would be at least sort of above the median for the next couple of years, or do you feel like, you know, where are we?

Speaker B: Yeah, I think I think the industry is, always is in a decent spot. It's a, it's a grind. New construction is, I think, faring a little bit better than resale, resales, just because we have, we have mechanisms we can pull to sell homes like incentives and things like that. But overall, uh, you know, you don't have a huge credit crisis today. It's really just a correction. Things got really heated during COVID A lot of builders that probably shouldn't be builders jumped into the craze and a lot of those guys are gone today. So that didn't do anybody any good for pricing either. But I would say overall, we're probably back to like 2019 selling levels. So the, the market is there. I, I think the one piece that everybody's missing is the, the profitability isn't like it was in 2019. And that has a lot to do with the incentives, especially in the entry level. And that's because of rates. Right. So you had home prices go crazy, plus rates, and it was just a shock for a lot of people. Yeah, people are not in a hurry to buy homes today. Right. But you know, I, I don't see rates. If you, if you look at the long history of rates, I mean, they're still predominantly, they're, they're low. They're not 3% anymore, but 6%, 7% is still very low historically. So when's a good time to buy? I don't know that it ever gets in the fours again. Maybe we hit five again in the, in the future. I just don't know how long that'll be. You know, look, we're, we're, we don't even talk about rates much anymore. Right. We, we do buy downs and stuff like that, but the reality is you just gotta, you just gotta, you gotta build through the, the bad markets and you gotta just keep, you gotta just keep grinding it out and plugging along because you, you can't, you, you can't blame something. Right. You just gotta run your business and figure out, figure out, uh, how, how to do it well. And that's what we're doing.

Speaker A: Yeah, I love that ad. I love that outlook, especially, you know, as long as there aren't signs of a crisis. Right. One way or the other, there's always going to be something. Yeah.

Speaker B: Oh, uh, Iran didn't help, obviously. Like we, we thought we were actually. I mean, we had our best January in the company's history of sales, and we had a great first quarter of sales. And then Iran happened and things kind of fell off pretty sharply, but I think it's starting to trend back a little bit. I think it, it will be good once Iran's figured out. But the reality is, look, we're going through a correction, and corrections always take longer than a crash. So, you know, if we would have had a crash, we would have probably already been on a huge upswing right now. But it's a correction and that just takes longer.

Speaker A: Yeah. On, on the Iran front, do you feel like that, that, that it was just, it was the uncertainty about what's this going to do, what's going to happen? Fuel, uh, what was it specifically?

Speaker B: Yeah, I think uncertainty. Nobody likes uncertainty in any market. Right. And we've had a lot of uncertainty throughout the years. And then Iran just put more uncertainty into it. And look, oil prices, gas prices have a huge effect on this business and lots of businesses. So I think those are, those are the big things. But uncertainty is always on everybody's mind, like home. Like, I don't care if, if we get a huge growth market again, I just want certainty. Like, if it's, if it's like this, that's okay with me. At least it's predictable. Right. We want predictability.

Speaker A: Yep. Yep, for sure. So. So, you know, the, the industry gets a lot of grief, I think, unfairly. The industry gets a lot of grief for sort of being behind the times when it comes to like, uh, you know, adopting technology or using, you know, the latest tools and resources. What do you. Where do you think? This is a really hard question. It's always almost a dumb question. I'll just go ahead, preface it with that. But I mean, where do you think the industry. Do you think that anything is going to be significantly different in home building in five years or.

Speaker B: I get asked this question a lot, and every couple years we get some new trends and then we go back to doing everything the same way that we have for however many hundreds of years. Right. It's an archaic business. I think it always will be until somebody figures out something that dramatically reduces cost and time together and it's easy to construct. And then until then, I think most things stay the same. It's just the way the industry has always moved. Yeah. So I don't know if that changes anytime soon. You know, there's little products that will change, but, but the overall. Right. House construction process, I think, stays the same. Yeah.

Speaker A: It would be hard to. It's hard to even imagine really, with the. Physically constructing a house, some of the prefab and all that stuff. Understood. But it's hard to imagine how the actual process of you know, framing, hanging Sheetrock, all that kind of stuff would, would dramatically change. I agree with you. What about, I mean what about some of the pre construction stuff, the entitled land is there. I don't know the answer to this question and I've thought a lot about it. Is there some type of solution or technology that could facilitate or lower cost for, for the sort of upfront regulatory burden that we were referencing earlier or.

Speaker B: You know, I really don't know the answer to that. I know that there's some really neat AI stuff that we've been looking at and been involved in like a little bit of beta testing or just helping out some companies that are working on certain AI apps that basically analyze land deals for you, quickly tell you where you know, off site sewers does a land plan for you can run a performer for you very quickly tell you, tells you how uh, a municipality has voted in favor or not in favor of you know, certain zoning in an area. It's really interesting. I think that'll help a little bit just from a uh, you know, time savings perspective because I mean we waste a lot of time analyzing deals. If we could have it done correctly in AI where which it takes a few minutes over weeks, uh, I think that would be a savings as far as the government, I think until government actually changes and, and they understand I think more about this business and what's needed to potentially lower cost. Nothing changes and it seems like it's, it always goes the other way, you know. Right. And we do have other you know, water quality stuff like that. So there's other issues that fall into the home building or approving land space. One, one great example is you know, septic systems. The, the municipalities and government can't seem to get utilities to big places like Lehigh or parts of Cape Coral. So there's still well and septic systems out there. And then you talk about water quality and now in certain areas we're required to use an advanced treatment system. Well the minute they did that it added $10,000 of cost, let's say to a house. And then at the same breath they're talking about affordability in those areas. So all those things matter and what the right answer is, I don't know. But I know it's definitely get utilities to all the lots in Florida very quickly. And you know, if they did that, you know, I would much rather pay off assessments for a homeowner, uh, on a uh, utilitized home than have a septic system.

Speaker A: Interesting Very interesting. Well, so do you, do you think that. That the federal government. There's anything that the federal government can do? You know, the. I don't know if you've seen the bills circulating and all, um, some of the silliness with what they're trying to propose and some of it's not silly. But do, do you think that there's. From that level that there's anything that can be done effectively that would help?

Speaker B: Well, I mean, there's always funding things for certain projects like utilities. And then I mean, obviously they had the four of four permit stuff where they essentially shut down, you know, approvals to this another process, you know, due to the environmentalists. So, you know, the federal government has their hands in a lot. There's obviously FEMA stuff, floodplain stuff. So, you know, I think there's always ways that they could help or expedite the process. Anytime you have anything to do, any property that has to go through any type of Fed approval, it's just adding more time and more cost.

Speaker A: So like wetlands and uh, floodplain stuff.

Speaker B: So the more they can expedite that stuff, the, the better. You know, I. More of a timing issue than a cost issue. It's just, it just takes so long. Got it.

Speaker A: That makes sense. Well, so if, if. Do you feel like the answer to this question it has to go municipality by municipality, or is there something at the state or local level that if you got, if you had, if they granted you one wish, you know, that you, you could do this and it would help?

Speaker B: Yeah, I think my, my wish would be just consistency across municipalities and building departments. Every municipality and building department is different, and that's something that could probably, I guess, come from the state. And I know they've tried to pass a few bills where it's kind of held the building departments a little more accountable. Uh, but there is literally no consistency among any municipality people. They're all in different systems and everything. Everything's different.

Speaker A: Yeah. Yep. So one of the things that jumped out to me about the recent. The latest bill that's in. I don't know if it's in the House or the Senate, but at the federal level was they were trying to attack this by requiring. They were providing funding for studying, but. But they were going to get municipalities to. If they would just provide, you know, like a playbook or examples up front.

Speaker B: Right.

Speaker A: And you know, I just remember sort of shaking my head like they're missing the point. That still does it. If a builder like you is, is building, you Know, almost a thousand houses, uh, a year and you're spread across eight different municipalities and they're all different. That creates additional cost, additional time, additional headache. Even if they could have the world's. They could, you know, spell it out for you up front. But if they're not consistent from one to the next, then it's not going to help with the bigger picture.

Speaker B: But one of my biggest pet uh, peeves is, is if some of our plans we'll use a uh, private inspector or sometimes even a private reviewer. And you know, the engineer that stamp these plans, he's who's liable and responsible for anything. Yet I have someone that doesn't even have an engineering degree at the county looking at these plans and saying no, we need to change X, Y or Z. Then my other gripe is, well, most of my plans you've seen a thousand, two thousand, three thousand times. Why. Why do you even need to look at them? M. Again, right. You should just be looking at the zoning, the uh, you know, waterways and let me, let me go about build, building that home. It should be approved like that. Yeah. 30 days plus sometimes, right.

Speaker A: And then you get one little knit and have to resubmit and it's another 30 days. And but to your point, the, you know, we see it in our business all the time. Sometimes it's. It's not about this. This municipality is difficult or not difficult. It is just consistency. It's be consistently difficult or you know, whatever. But it shouldn't be one thing if one reviewer reviews it, but then a different answer if the next reviewer in the same municipality views it. I mean it's a sort of a moving goalpost. I can't imagine how difficult that's got to be for you in. In Yalls seat.

Speaker B: It is. And, and you, you're exactly right. Like everything this in this business or any business, right. It's about consistency and predictability. That's how you get better. Right. Efficiencies. Right. And there's just none of that when you work in multiple n. Well, even in the same municipality because like you said, if you get a different review or a uh, different. You know, they, they look at different things. Yep, yep.

Speaker A: I mean we are like when we first started talking, we. You were talking about the systems and processes and things like that. It, it just makes it impossible to have a process when you don't know how it's going to be handled. But anyway, well, the, if you had a chance to tell the average or tell the universe of, of. Of new home buyers Something that you feel like you can't get across or that gets hidden or that they miss or that is just. Is, don't fall for this. If you were able to sort of shout from the rooftops to somebody that is looking for a new house in your area is just, is there anything that you, is there something that jumps out at you that you would want to shout?

Speaker B: I would, I would probably say, you know, there's a reason why certain companies are able to slash their prices considerably. I don't know that that's always a good thing. Right. So just be leery of that and leery of people's repertoire reputation. You know, a lot of companies today are cutting things out at homes to get pricing where they think it needs to be because of the affordability issue. You know, we, we encourage third, third party inspections. You know, we, we've had third party inspectors come inspect our homes and the report back to some of the homeowners was there was almost nothing on it. And the people questioned what, what did we pay for? And we're like, well, this is some of the best quality that we've seen as far as this level. And those are the things we want. And like I said, look, we're not, not anywhere near perfect, but that is something that is dear to our hearts. And we, we just want to provide good quality homes for people and, you know, we'll always stand by our own.

Speaker A: I love it and I love, Look, I, I think everybody loves. I don't, I don't want to characterize, not an underdog story, but everyone, you know, in a sea of national home builders with, with endless balance sheets, endless ability to get whatever they want. I, I just tip of the cap that you're able to build what you built.

Speaker B: Our team fights and you know, we, we had to fight since day one. Whether it was getting financing or, you know, whatever we were doing, we've just always keep pushing, right. Keep, keep the drive to win and uh, just be better. And I, I think as long as we keep that mentality of just being better, doing things better and you know, stand behind in our product, the integrity and trust, that's how you, that's how you beat the bigger guys. Yep.

Speaker A: And I love that because it's hard because the short game encourages the shortcuts. Right. But it sounds like you guys are, are not falling for that and playing the long game, which is when, which is I, I think the bigger win. So, I mean, would you be willing to talk to us briefly about your core values and what those Mean and how difficult they are to keep consistent.

Speaker B: The biggest things are just building better and creating opportunities. And what I like about creating opportunities, I think that that's a huge one for me and that's probably one of my be being better, obviously is why we started this company. But what I try to get everybody to realize is creating opportunities. It doesn't only mean something for, for our people, but it creates opportunities for the people that we sell our homes to. You know, from a financial standpoint, from a, uh, family standpoint, you know, one of the best things in the world for me is going to my title company and seeing how happy these families are when they close on a home. And you know, some of them have little parties in the title company and it's, that's, that's what it's all about to me and inside our own company. Like, one reason why I love this business too, and I, uh, didn't start out with a custom home building company, was because we wanted something that we could scale and grow. And I'm a big believer in scale and growth because it creates opportunities for all of our people. If we weren't growing, everybody would be stagnant. You know, we want to create more leaders. We want to grow everybody in the company financially. And the only way to do that is to continue to grow our opportunities. So that, that's a big focus of ours.

Speaker A: Yeah, I love it. And I love that fulfilling dreams is also in there because the. To me, there's something special about. I, uh, mean, it's exactly what you just said, right?

Speaker B: Yes. That's the title part, right? You're fulfilling those dreams of, of uh, of homeowners.

Speaker A: Right. And you know, like I, there's, to me, there's something special about being, just even having a small part because it is the American dream, right? And everyone grows up. I, well, not everyone, but a lot of people grow up dreaming about the day that they're able to buy a home. And for you guys being part of that, I think it's pretty special.

Speaker B: It is. And that's one reason why we wanted to. To get into some, um, different pricing segments of home building. Because I would love nothing more than to take a family from buying their first home, one, you know, an entry level home, and then all of a sudden they're moving up and they're ready for a bigger home and we can just continue to provide them homes all the, all the way throughout their, their life.

Speaker A: Oh, uh, that's cool. That's cool. Help from the audience perspective, somebody that isn't in the industry. I think that there's often a perception that for home builders, you build a house, you sell it, you hand over the keys and then that's sort of the end of the relationship. Help us understand what all is involved post closing and how difficult that is to really, especially for a company that really wants world class customer service.

Speaker B: Our customer service team is top notch and Jen Sipperly that runs it. She's just an amazing person who truly cares. I mean I've never seen someone work so hard. She wants to make everybody happy. So we are in constant communication with, with homeowners throughout, throughout, you know, the warranty cycle and then even, even after that. I think another reason why I, I write the letter is just to, to again say thank you and kind of just stay in communication a little bit with, with those buyers and then ultimately with their, their realtor as well. And we want them to always have a great experience. So one they refer us. We've had a number of family referrals. We've had one family that owns seven homes. Their entire family has purchased the home from us because they love it so much. And those are the stories we want. And again, you know, to continue to reach out to them throughout the years and just check on them and see how they love their home. That's great feedback for us too. And it's, it gives us feedback too on where we can be better, what we can do better. So I'm always interested in that feedback.

Speaker A: Yeah, but unlike, unlike a, um, an existing home where you sort of go through an inspection and then you have a little bit like, then you, all of a sudden you're the owner. The air conditioning breaks. The next day it's on you, you guys. And correct me if I'm wrong, but you guys stay. You know, it's sometimes two years.

Speaker B: Yeah. We're in touch for at least a year, sometimes two. And then in a community deal, your typical. Typically in there a lot longer. It's a lot easier than on scattered lots to stay in touch. But our uh, communities, you know, there's obviously we're we're typically part of the HOA management so we're always in constant communication.

Speaker A: That's interesting. Well Ian, thanks again for your time. I really appreciate it.

Speaker B: Absolutely appreciate you having me.

Speaker A: Don't forget everybody, you can find boundary breakers in a lot of places. You can watch our episodes on the Boundary Breakers YouTube channel where you can listen to each podcast on Spotify, Apple Podcasts or any of the other major podcasting platforms. Thanks for listening.