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Surviving a Downturn

Surviving a Downturn

How Veteran Home Builders Survived the Great Recession

They've seen it all, 18% mortgage interest rates in the early 80s; a bottoming out of the market in 1993; the record prolonged upturn that lasted until 2007; the Great Recession of 2008-2013; and, the current "strong demand meets sticker shock" until the COVID-19 pandemic threw everything into confusion for the housing market. How did these veteran builders survive? We asked builders what advice they would give newer contractors who want to make home building their lifetime career:

Bill Kimberley
Kimberley Development, Des Moines, IA

Woman-Centric Matters! Certified LogoThe housing recession was really challenging. Kimberley owned a lot of ground that was purchased by putting 30% down with the balance financed through bank loans. When land values sank, those land loans became non-conforming and banks were being pressured for all real estate loans to be conforming. The banks could have foreclosed on those loans, but Kimberley was never leveraged to the max. Over the years he had built and managed some commercial property with a steady income, had stellar credit, and had never been late on a payment. Kimberley was straightforward with his banks and even had to negotiate a little more aggressively, eventually working everything out.

Mark Kiester
Unique Homes, Des Moines, IA

Kiester’s schooling centered around being a commercial artist, and he has the ability to “see” the finished product in his mind – a definite asset in home building. He spent 16 years in car dealerships prior to getting into home building (10 of those years as general manager of a dealership). That experience managing others really helped him in managing his team at Unique Homes, including his sub-contractors and vendors. One of the reasons for his company’s success – and survival – was participating in 13 of their local Parade of Homes events. The public exposure to his homes always led to additional sales.

Kiester's advice to young builders:

  • Do not leverage yourself too deep.
  • Find another builder willing to mentor you.
  • Remember, you are only as good as the people who work for you!

​Tyrone Leslie
Heritage Homes, Fargo, ND

Woman-Centric Matters! Certified Logo"We were steadfast. We didn’t pull back on our marketing or our standards. In fact, we opened three new model homes and staffed them 6 days a week. You can’t let fear lead you. We got everybody on board, focused on our values, and kept all of our staff."

Chris Jones
C.A. Jones, Inc., Columbia, IL

Jones had always worked with local banks; he knew the bankers and they knew him. They shopped the same stores and ate at the same restaurants. His bankers believed the housing recession wouldn’t last forever. The banks held the collateral, and whatever the collateral produced, they got, which was better for the bank than foreclosing on the lots at a loss. Some of the loans Jones would have to re-write every 3-6 months as opposed to 5-year loans. His personal reputation and dedication to the company’s financial obligations carried them through and they are reaping the benefit today. Still, he would lie in bed at night with thoughts of bankruptcy.

Jones sold off heavy equipment including excavators, bulldozers, and tractors. He borrowed from his personal 401K and had to pay a penalty for early withdrawal when he defaulted on that loan to himself. He had to let many very good employees go and went back to being one of his own construction staff. Jones even did his own marketing by personally hanging flyers in storefronts and on bulletin boards throughout his market. And, Jones placed a large sandwich-board sign in the back of his pickup truck advertising his two developments as he drove around.

Robert Foushee
Robert Foushee Homes, Inc., Independence, MO

Builder-Centric LogoFoushee’s bank was taking in homes being abandoned by other builders in the market and hired him to finish them up so the bank could put them up for sale. The bank also had repossessed some completed homes that needed work and hired Foushee to do the needed repairs. That business, along with 2 to 3 custom homes each year, got him through the downturn. At the onset of the downturn, Foushee was already nervous and early on sold his spec homes and the lots he owned, even taking losses, to get them off his books. Four years later, as the market began to recover, he was able to buy back some of those same lots he had sold, at a significant discount. About that same time, he purchased a 31-lot subdivision for about 25 cents on the dollar, on which he built affordable homes that sold quickly at a reasonable profit.

Frank Morin
Accent Homes, Inc., Gary, IN

"Keep debt low, even in the good times. Maintain a healthy balance sheet. Always be alert to changing conditions. And, don’t wait to cut expenses if the market weakens. Similarly, don’t be too cautious, or the recovery will leave you behind."

Morin brought sales in-house and at the same time, worked harder at reaching out to and personally cultivating relationships with real estate agents who were well-versed at selling new construction. Accent Homes also became more flexible with plan customization, which provided better customer service and led to more sales.

Alex de Parry
Ann Arbor Builders, Inc., Ann Arbor, MI

Michigan was severely hit by the housing recession. De Parry had to make some hard decisions. He sold off some assets, including a SkyTrak crane. His framers formed their own company, and he still uses that company today. De Parry had a subdivision loan that he had to re-negotiate. Fortunately, many of his clients (University of Michigan, doctors, and other professionals) were not as impacted by the economic downturn, and in fact, reasoned that they could (and did!) get a better deal building a custom home at that time. His company also rehabs older commercial buildings; combined with the custom homes, they made it through.

Thank you to these builders for sharing their stories and offering their advice!
Find more Builder Advice by Clicking Here.

Many seasoned builders advise not cutting your marketing during a downturn - how are customers going to know who you are and where to find you? At Design Basics, we have the tools to help you stand out from other builders:

Contact us today to learn more: 800.947.7526

Cover Image: <a href="https://www.freepik.com/free-photos-vectors/background">Background photo created by mindandi - www.freepik.com</a>

Letter from the President

As we reflect on 2019, we are pleased with the progress Design Basics, LLC, has made towards adding to our 2,800+ collection of home plans as well as building our brand by designing unique, well sought-after home designs, providing exceptional customer service, and fostering growth of our Woman-Centric Matters!® and Builder-Centric℠ preferred builder programs. In addition, we are thankful for our customers and their continued input and support. Not only is their feedback and recommendations important to our design process, but many new ideas arise from customers working with our Plan Specialists. And, we can’t forget our customer referrals!

NAHB International Builders’ Show®. This year is already off to a great start with the Design Basics’ team exhibiting at the NAHB International Builders’ Show on January 21-23, in Las Vegas. Our booth features brand new home designs, including a collection of multi-family home designs. Design Basics is recognized as one of just a handful of companies that has consistently exhibited for the last 25+ years, and the only home design firm with this distinction.

New Website. We launched our new website, www.DesignBasics.com, with a new search function that allows you to search by livability, collection, plan type, designer, and many other features…even place your order online! Additionally, you will find many useful references materials at your fingertips – preferred builder programs, thoughtful design concepts, home design articles, and other resources such as Her Home™, Livability at a Glance™, Finally About Me®, and our Bookstore. We invite you to peruse the site, search home plans, sign up for a newsletter, and complete a quiz to discover your new home personality!

Evolving Home Design Plan Book. We published and distributed a new home plan book, Evolving Home Design, featuring 75 of our new and best-selling home plans. Many of our new floor plans have been designed with versatility in mind and new plan badges identify design styles: Multi-Generational, Value-Engineered, and Woman-Centric. Floor plans are not only designed with her in mind but also as value-engineered plans, mindful of the constant fluctuation of building material costs. A win for everyone!

Neighborhood in a Box® (NIAB). We just revamped and relaunched NIAB, a fabulous residential development solution for home builders! Not just a collection of home plans, NIAB offers a total package for designing a neighborhood with a cohesive look with cost savings and resources for home builders.

From America’s Premier Woman-Centric Home Designer, we wish you much success in 2020 and look forward to working with you as your home design and marketing partner!

Sincerely,
Patrick M. Carmichael
President and Chief Operating Officer

Resource Links

Neighborhood in a Box®: https://www.designbasics.com/home-builders/neighborhood-in-a-box/
Her Home™ Magazine: https://www.designbasics.com/her-home-magazine/
Woman-Centric Matters!® Builder Program: https://www.designbasics.com/woman-centric-matters/
Builder-Centric℠ Program: https://www.designbasics.com/home-builders/builder-centric-program/
Blog: https://www.designbasics.com/blog/
Website: https://www.designbasics.com/

35th Anniversary Featured in Strictly Business

Design Basics, LLC (www.DesignBasics.com) has reached an exciting milestone as the company celebrates 35 years of delivering innovation and leadership through creative home design, marketing, and business transformation solutions, while protecting their right to do so, maximizing value for their customers.

Design Basics began in 1983 as a custom home plan design firm for professional builders in their local community, Omaha, Nebraska. Over the years, Design Basics has expanded their offerings to include a wide variety of home plan designs, plan alteration services, and professional marketing products and services as well as keeping a focus on custom home design. Design Basics’ home designs can now be found throughout all 50 states, Canada, Mexico, and other countries around the world.

Read more: Strictly Business Feature

Developer Services

Developer Services

Have you taken advantage of our many services we offer for developers? If not, now is the time to check it out!

Home Design

  • We offer over 2500 plans in our library!
  • Multi-elevation plan sets -- a core plan with different elevation styles saves time and money.
  • Custom home design.
  • Plan alterations.
  • Promotional artwork -- market the plan before purchasing the full construction set.

Marketing Materials

  • Streetscapes
  • Plat maps
  • Community logos
  • Community signage
  • Amenities artwork
  • Billboards
  • Lot Markers

Builder Programs

  • Builder-Centric℠ Preferred Builder Program -- receive discounts and materials to help you sell more homes.
  • Woman-Centric Matters!® Builder Program -- recognizing the importance of women's preferences in the home.

Learn more with our Developer Services program, and contact us today!

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