Not all the news regarding current economic conditions is bad.
“I really get tired of turning on the television or radio and hearing all the doom and gloom about our economy and how bad things are going. Not all the economic news is bad. In fact, there are some great things going on folks can take advantage of — but that never seems to get reported,” said Gaylord Hanes, a Waxahachie-based homebuilder and office holder with home building organizations on both the state and national level.
Removing the Fedora from his head, Hanes shakes head as a bewilder look covers his face.
“Do you know that right now, at this very minute, I can build a home at the lowest cost than I’ve been able to do in the 30-plus years I’ve been building?” he asks rhetorically. “Do you know that right now, interest rates are at their lowest point, allowing homeowners to tens of thousands of dollars over the lifetime of their mortgage note?”
Considered one of the leading statesmen in the Texas homebuilding industry, Hanes places his hat on the table beside the desk, sits down in the chair and begins to “school” everyone in the room on how current economic conditions combined with advanced technology have created the “perfect storm” for consumers.
During a recent national homebuilder’s meeting, Hanes said he had the opportunity to visit with top economists and suppliers of building materials.
“There are two things I can tell you with absolute certainty,” Hanes said, leaning forward in his chair, stressing the emphasis of the words yet to come.
“Number one, prices for building materials and labor are currently at an all-time low,” Hanes said. “With the depressed economy, the new construction has fallen off dramatically from its peak just a few short years ago. With demand low, suppliers of building materials have reduced prices in order to clear existing inventories and create a cash flow stream. Most of the materials used in home construction are cheaper than they have ever been.
“Likewise for labor,” he said, noting that material and labor are the two major expense items in home construction. “Nationwide, many of the contractors and subcontractors are looking for work and willing to take less compensation just to have a job. Additionally, in most cases, these top craftsmen are able to begin work immediately, compared to when the industry was at its peak and contractors were working several jobs at once to keep up with demand.”
Running through the checklist in head that’s been honed to a point from more than three decades of experience, Hanes lists each step in the building process and itemizes how much savings is available for today’s consumers.
“The second thing I can tell you with absolute certainty is that it won’t stay this way for long,” he said, slapping his hand on the desk to emphasis the point.
“Every single supplier has told me that as soon as the industry begins to pick up, they will have to raise their prices for materials because they can’t stay in business at the current level. As demand for construction picks up, I can tell you for a fact labor costs will go up as contractors and subcontractors begin to get busy again.
“After speaking with a lot of economists, I can also tell you that interest rates will most certainly go up. What I can’t tell you is when all this will happen,” Hanes said. “But right now, today, anyone in the market for a new home can build that home cheaper and faster than at anytime in history. In the very near future, we won’t be able to say that.”
Faster, easier process
In addition to the economic conditions, Hanes points out that modern technology has also greatly enhanced the home-building process, enabling consumers to get the home they want in less time.
Hanes said a lot of people are under the perception that if they are interested in building a new home, it is a process that can take more than a couple of years from the first time they meet with a builder until they are handed the keys to their new home.
“That’s not the case at all. It can take that long if the customer wants it to take that long, but it’s not uncommon at all for that entire process to take as little as six months from the first meeting with a potential customer,” Hanes said.
Quick answer on home loans
One of the time-consuming processes of home ownership was getting qualified for a home loan.
In the past that process could have taken several weeks, if not months, before learning if the customer was qualified for a home loan and what amount they were qualified for — required information before the builder can even begin the planning process.
“The computer has really changed the entire process of obtaining mortgage finance. In most cases, with the required information provided by the customer, I can now have an answer on financing in less than 24 hours,” said Tom Ker, SVP/branch manager and loan office with ViewPoint Bankers Mortgage in Waxahachie.
“With just the basic information, I can usually get an answer in less than a day on whether that customer is qualified to buy a house and how big of a house they can purchase,” he said. “Of course they still have to go through the verification process prior to closing. But if all the initial information is accurate, there are no delays in moving forward — whether building a new home or purchasing an existing home.”
Ker said that quick response enables the customer to move forward with either the builder or real estate broker, allowing them to shorten that time frame between decision making and actually moving in.
“In some cases it makes all the difference in the world,” Ker said, explaining that once approved, customers are able to lock in current interest rates. “An increase interest rates by as little as a half percentage point doesn’t sound like much, but for a lot of families trying to buy or build a home, it can dramatically change the equation for what they can afford — not to mention how much they will be paying for that home over the life of the loan.”
Ker said if a real estate agent or builder refers a customers to his office for financing, he’s going to need:
• Job history
• Gross monthly income
• Dates of births
• Social Security numbers
• Number of children in the household
• W-2, 10-99 or self employed income tax status
“In most cases, if that information is complete and accurate, I can run it through and have an up-or-down answer within 24 hours,” he said, noting that a few weeks ago a builder referred a customer to his office for financing as able to have an answer back within minutes.
“In the past, loan officers had to wait for underwriters to determine whether or not a customer was qualified for a loan — a process that could take weeks just to see if that person was eligible for a loan or not,” Ker said. “The process isn’t that time consuming anymore.”
Ker stressed that not every customer receives the answer they want to hear.
“Not everyone qualifies for a home loan,” he said, noting that part of his job is help customers research their credit, find problems that be corrected and offer counseling on how they can work to improve their rating to become qualified in the future. “What we are now able to do is get that information to the customer a whole lot faster so they can either move forward on purchasing or building a home, or work toward improving their credit rating for a future purchase.”
while you wait
Waiting for an answer on a loan qualification isn’t the only part of building a new home that’s now faster.
Through the aid of new architectural software, the process and engineering a new home can be done while in a single office visit.
“It normally takes about two weeks, but that’s because we recommend the customers take that time to look over the designs, study them and make any changes they want before finalizing the plans for the builder. A home is the single largest purchase most people make and they are going to be living in that home for a long time. We want to make sure it’s exactly the way they want it. However, we have done designs from start to finish in a single afternoon because that’s what the customer wanted,” said Chris Acker, chief designer with Blue Line Design Company in Waxahachie.
Working at the computer at his desk, Acker pulls up a blueprint of home his company is designing.
The image is displayed on a 60-inch flat screen monitor mounted on the wall behind the desk, allowing the customers and builder to see all the changes being made as Acker works.
Using the computer mouse to drag the arrow across the screen, Acker places the arrow along the wall of the corner bedroom and double clicks the mouse.
“Let’s say this is the home you want to build and you realize that you have a king size bed and need to add three feet to the master bedroom,” he said, dragging the wall out to add the additional footage.
“In just that one keystroke we’ve completed a simple change that used to take hours when designs were done by hand. At the same time, it now shows the total square feet of the home and the additional building cost of that one change.
“Based on the square-feet construction cost provided by the building, that change added $8,000 to the cost of the home. You realize that $8,000 change put you over budget and it’s better to get a smaller bed,” Acker said, eliminating the change with a click of the mouse and restoring the plan back to its original condition on the screen.
Acker said the Soft Plans software system for architects has dramatically changed his industry, enabling architects and designers in a fraction of the time is used to take.
“We are still required to know how to design by hand,” he quipped, noting that is still part of the requirements for licensing. “We are also required to have a special certification for computer designs. Even though it looks easy, it’s not as simple as dragging a mouse over a screen and clicking the button.”
The benefits for the customer, however, are tremendous.
“The primary benefit is it helps the customer visualize their home as we design, rather than having to wait until we draw the design by hand. As you’ve just seen, we also make changes as they watch — which is one of the most time-consuming parts of the process,” Acker said.
Typically, Acker said the builder accompanies the customers on the first meeting.
The first step in the design process begins with the lot, which includes the necessary information on deed restrictions and zoning.
“We really can’t do anything until we have that information because that lets us know what we can and can’t do in terms of the design process,” he said, noting that his firm maintains updated plat information on every subdivision in Ellis County.
“If you tell us where the lot is, I can very quickly find out if it has access to a gas line or underground utilities,” he said.
“The next step is to nail down the footage and the type of home the customer wants to build. Next we need to know how many bedrooms and whether they are for a boy or girl, because it does make a difference, the number of children in the home and whether there is a need for a formal dining room.”
Acker said all this information is relevant in order to design a home that meets the family’s needs, while still staying within their budget.
With those questions answered, work begins on the floor plan.
Acker said his firm has approximately 4,000 floor plans on file and it’s fairly easy to match one to the type of home and size being requested.
“In most cases, that’s usually where we start and modify from there,” he said.
At the end of the first meeting, the plans are printing and handed to the customer to take home and look over.
“Typically, we have two to three meetings with the customer to make modifications at each meeting,” Acker said, adding the entire process usually takes about two weeks. “We could do it a lot faster if we need to, but we recommend the customer takes that amount of time to make sure the plans are exactly what they want. After all, this is a big purchase and we want to design a home they will be enjoy living in.”
Acker said Blue Line Designs specializes in designing Energy Star rated homes, which can improve the appraisal value by as much as $6,000 just by being an energy efficient home.
“That’s a direct savings to customer, right off the bat,” he said.
Picking his Fedora up from the desk, Hanes adjusts it on his head back to the audience in the room.
“The news isn’t all gloom and doom,” he said. “Today, we can build a home so much cheaper, with lower interest rates that will save the typical buyer at least $250,000 over the life of a 30-year home loan.
“That’s $250,000 a family could be putting into savings for their retirement, or to help their kids with college,” Hanes said. “I don’t know about you, but being able to save $250,000 on a needed expense doesn’t sound bad to me at all.”
On the Net
Ellis County Homebuilders Association
Homebuilders Association of Greater Dallas
Homes by Hanes
ViewPoint Bankers Mortgage
Blue Line Designs Co.
Contact Neal at firstname.lastname@example.org or 469-517-1457.