Lack of Mortgage Instruments Plagues Housing Market

NEWPORT BEACH, CA—Buyers continue to face the issue of housing affordability, creating a growing demand for diversity in the product Trumark Homes offers within its communities, president of Trumark's Southern California division Richard Douglass tells GlobeSt.com. We spoke exclusively with Douglass about trends he is noticing in the housing industry and the challenges of designing communities for today's home buyers.

GlobeSt.com: What are some of the most notable trends that your company is keeping its eye on right now?

Douglass: We continue to see buyers facing the issue of housing affordability, with a lot of that challenge being a lack of mortgage instruments. This has led to a growing demand for diversity in the product we offer within a given Trumark Homes community. We have buyers at complete opposite ends of the spectrum in terms of pricing expectations, ability to finance and desires when it comes to amenities, which puts the onus on us as builders to be creative in developing a variety of home types. This is a big shift from the historic approach to building homes, where buyers were more homogenous and we were able to more readily predict their priorities when it came to buying a home.

While the trend of integrating technology into new homes especially to appeal to Millennials is nothing new, there is a new wave of technology—from driverless cars to 3-D printing—that will have a significant impact on how we do business as homebuilders, from the way we select locations for new communities to the actual design of a home.

GlobeSt.com: What are some of the challenges you face when designing communities for buyers today?

Douglass: The nuclear family that we've been building homes for over the past several decades is a much smaller segment of the market, and that is unlikely to change. We are designing for this new multi-generational family, which often includes Baby Boomers living with their Millennial children, or even their parents. To accommodate those buyers, many of our communities have living spaces spread out on several floors, with a parent/guest suite situated on the first level to give Baby Boomers that feeling that they have their own space.

We are also on the cusp of major changes in the materials and composition of homes of the future, since our industry is mandated to feature “zero net energy” by the year 2020. So, we have the combination of making sure the technology meshes with the form and function of home living in order to ensure that that product we are delivering now is relevant 10 years from now. At Trumark, we are incorporating elements in many of our standard designs that are typically found in luxury home products, including high ceilings, custom lighting and everyday-user technologies.

GlobeSt.com: How do you see technology in homebuilding changing, and how does your firm stay at the forefront of it?

Douglass: Homes today are being built to be more automated and more sustainable. California's Zero Net Energy Action Plan by the California Public Utilities Commission and the California Energy Commission requires builders to create a self-sustaining market by building net-zero-energy homes by 2020. Our team at Trumark will be at the forefront of this technology shift, focusing on incorporating day-to-day user technologies, such as electric car chargers, USB ports in master bedrooms, etc. We want these everyday technologies to be seen as an essential part of the home, not an afterthought.

GlobeSt.com: With the rise in popularity of driverless cars, how can homebuilders prepare now for what lies ahead?

Douglass: Driverless cars, while being tested now, will likely have a major impact on our lives within the next five years, especially in urban locales. For the homebuilding industry, this phenomenon creates a lot of unknowns for the design and location of new communities. For example, will homes still need garages? How will commuting patterns be affected? Will they change buyers' desire on where they want to live?

We are currently looking at the home-design process and elements that we see in urban settings and bringing those to more suburban areas. We still have some time to feel this one out, but we don't want to wait too long to react before bringing a product to market that will address this new way of life. A lot of the challenge here, like so many parts of our industry, will be getting local and regional government to see the world as we see it.

GlobeSt.com: What issue stirs the most passion in you these days?

Douglass: That's an easy one, and it's the issue of over-regulation. On a positive note, the question is increasingly being raised, and there is now a recognition of the impact of over-regulation on jobs and housing affordability. Sum it up, and it's an economic depressant. Our current framework is insane. It is impeding our economy and our lifestyles. I'm an environmentalist, a surfer, hiker, all of that. But what I'm talking about is how we revitalize land-use patterns and infrastructure that is almost a century old in much of Southern California. Why is this controversial? Why does it take so long?  It's like saying I need a major medical operation, but let's wait, and then proceed with the technology of the 1950s. Would anyone want that?

GlobeSt.com: If you could sum up your market predictions for 2017 in one sentence, what would you say?

Douglass: The issue of affordability will continue to be at the forefront as we enter 2017, along with challenges in the construction market due to labor shortages and rising costs, and the increase of Millennial buyers will continue to change the game in terms of how we build homes.

NEWPORT BEACH, CA—Buyers continue to face the issue of housing affordability, creating a growing demand for diversity in the product Trumark Homes offers within its communities, president of Trumark's Southern California division Richard Douglass tells GlobeSt.com. We spoke exclusively with Douglass about trends he is noticing in the housing industry and the challenges of designing communities for today's home buyers.

GlobeSt.com: What are some of the most notable trends that your company is keeping its eye on right now?

Douglass: We continue to see buyers facing the issue of housing affordability, with a lot of that challenge being a lack of mortgage instruments. This has led to a growing demand for diversity in the product we offer within a given Trumark Homes community. We have buyers at complete opposite ends of the spectrum in terms of pricing expectations, ability to finance and desires when it comes to amenities, which puts the onus on us as builders to be creative in developing a variety of home types. This is a big shift from the historic approach to building homes, where buyers were more homogenous and we were able to more readily predict their priorities when it came to buying a home.

While the trend of integrating technology into new homes especially to appeal to Millennials is nothing new, there is a new wave of technology—from driverless cars to 3-D printing—that will have a significant impact on how we do business as homebuilders, from the way we select locations for new communities to the actual design of a home.

GlobeSt.com: What are some of the challenges you face when designing communities for buyers today?

Douglass: The nuclear family that we've been building homes for over the past several decades is a much smaller segment of the market, and that is unlikely to change. We are designing for this new multi-generational family, which often includes Baby Boomers living with their Millennial children, or even their parents. To accommodate those buyers, many of our communities have living spaces spread out on several floors, with a parent/guest suite situated on the first level to give Baby Boomers that feeling that they have their own space.

We are also on the cusp of major changes in the materials and composition of homes of the future, since our industry is mandated to feature “zero net energy” by the year 2020. So, we have the combination of making sure the technology meshes with the form and function of home living in order to ensure that that product we are delivering now is relevant 10 years from now. At Trumark, we are incorporating elements in many of our standard designs that are typically found in luxury home products, including high ceilings, custom lighting and everyday-user technologies.

GlobeSt.com: How do you see technology in homebuilding changing, and how does your firm stay at the forefront of it?

Douglass: Homes today are being built to be more automated and more sustainable. California's Zero Net Energy Action Plan by the California Public Utilities Commission and the California Energy Commission requires builders to create a self-sustaining market by building net-zero-energy homes by 2020. Our team at Trumark will be at the forefront of this technology shift, focusing on incorporating day-to-day user technologies, such as electric car chargers, USB ports in master bedrooms, etc. We want these everyday technologies to be seen as an essential part of the home, not an afterthought.

GlobeSt.com: With the rise in popularity of driverless cars, how can homebuilders prepare now for what lies ahead?

Douglass: Driverless cars, while being tested now, will likely have a major impact on our lives within the next five years, especially in urban locales. For the homebuilding industry, this phenomenon creates a lot of unknowns for the design and location of new communities. For example, will homes still need garages? How will commuting patterns be affected? Will they change buyers' desire on where they want to live?

We are currently looking at the home-design process and elements that we see in urban settings and bringing those to more suburban areas. We still have some time to feel this one out, but we don't want to wait too long to react before bringing a product to market that will address this new way of life. A lot of the challenge here, like so many parts of our industry, will be getting local and regional government to see the world as we see it.

GlobeSt.com: What issue stirs the most passion in you these days?

Douglass: That's an easy one, and it's the issue of over-regulation. On a positive note, the question is increasingly being raised, and there is now a recognition of the impact of over-regulation on jobs and housing affordability. Sum it up, and it's an economic depressant. Our current framework is insane. It is impeding our economy and our lifestyles. I'm an environmentalist, a surfer, hiker, all of that. But what I'm talking about is how we revitalize land-use patterns and infrastructure that is almost a century old in much of Southern California. Why is this controversial? Why does it take so long?  It's like saying I need a major medical operation, but let's wait, and then proceed with the technology of the 1950s. Would anyone want that?

GlobeSt.com: If you could sum up your market predictions for 2017 in one sentence, what would you say?

Douglass: The issue of affordability will continue to be at the forefront as we enter 2017, along with challenges in the construction market due to labor shortages and rising costs, and the increase of Millennial buyers will continue to change the game in terms of how we build homes.