metro
This roomy kitchen with a dining area was designed and built
This award-winning foyer was designed and built by Superb Custom Homes.
by Frankel Custom Homes.
Building Industry from page 27
Model Homes A Rare Luxury
Because of tight credit on the part of lend-
ers, many builders are operating with no
inventory.
Whereas in the past, a builder operated
on a line of credit, today the builder and the
homebuyer go to the bank together. Only
when the bank deems the buyer creditwor-
thy is the builder issued a construction loan
to build the house.
"It's hard for people to look at a floor
plan and say, can envision myself in this
house:" said Stoskopf."Builders need to
have inventory. They maybe don't need
to have 14 homes going at one time, but
what's wrong with having four homes
going at one time?"
David Steuer of Steuer & Associates
said his company could no longer afford
the marketing expense of maintaining a
furnished, decorated model. Pre-crash, his
company was building 100 homes a year;
now it's building a couple of dozen homes
in the $300K to $450K price range along the
1-275 corridor and in Birmingham.
Surviving the downturn hasn't been with-
out pain for Steuer. "After having made it for
18 years without laying people off, we had
no choice but to cut back:' he said. "We also
began to do more real estate brokerage and
build on other people's property:'
Frankel Custom Homes is another com-
pany that reinvented itself. The company
used to have 200- to 300-lot subdivisions,
but those land holdings ran out right
around the time the economy tanked.
"With only small pieces of land left,
we were able to weather the storm': said
Laurie Frankel.
Frankel is one of a few builders to main-
tain a model home. The model also doubles
as the company's offices — a way to cut
costs, Frankel added.
Frankel Custom Homes will likely have
four houses under construction at its
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When Will Housing Recover?
The market hit bottom in 2009, and — if
it were a normal economy — one would
expect it to rebound by 2012. But this isn't a
normal economy, Stoskopf said.
"This should be a market of 8,000 or
9,000 permits per year:' he said. "But that's
the impact of the economy: no jobs, higher
energy prices and the inability to even cre-
ate those homes because there's not enough
capital in the market."
Until the country adds jobs, the housing
slump is likely to continue.
"People can't buy or don't feel comfortable
buying a home if they are either concerned
about the future of their job or they simply
don't have a job',' Stoskopf added.
According to Stoskopf's forecast, the
market should return to 7,000 or 8,000 per-
mits a year (still 20-30 percent lower than
the 40-year average) around 2014 barring
another recession.
Most builders agree that there is a
market for new homes and some pent-up
demand is out there. Many of the "steals"
related to foreclosures and short sales are
gone, and there are few "good" existing
homes for sale in the communities where
people want to live.
According to Stoskopf, the industry
needs to get credit flowing again in a
responsible manner. When that happens,
he said he believes when builders build,
buyers will come.
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Legacy at Lone Pine Community in West
Bloomfield in the next month, according
to Frankel. Still, the company found a new
niche during the economic downturn:
rebuilding partially built, abandoned homes
on great lots found by customers. Frankel,
which has an in-house architect, reworks
the homes, fixing and finishing.
"Three to four years ago, we were doing
no remodeling, but that's changed during
the past two years',' she said. "Remodeling
jobs will continue to be a huge part of our
business:'
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