SHOW TRANSCRIPT

 

[00:00:05] Speaker 1 Welcome to another episode of the Go with John Show. I’m John Jorgenson and today we are here with Michael Schnitzer. Hello. How are you doing? So so we’re going to talk about a couple of things today, Mike. We’re going to talk about on the first half of our conversation today. We’re going to talk about floor plans and how to look at floor plans and how to figure out.

 

[00:00:25] Speaker 2 What’s right for you. For you, right?

 

[00:00:28] Speaker 1 Yeah, right. And then after the break, we’re going to talk about kind of what’s going on in the market and trends in the building industry. So this is kind of a two fer today. We’re going to get a couple of things in. So. So tell us a little bit, Mike. So for those of you who don’t know who Michael is, Michael is the president of Stanley Martin. Customers? I am. Yes, you.

 

[00:00:46] Speaker 2 Are. Okay.

 

[00:00:48] Speaker 1 And Michael does all the designing of all the homes that are customized on our website. And he’s really good at it. He won’t admit it, but I’ve been working with him side by side now for 15, 16, 17 years. I got to go back and count again. But I’ve seen you do some amazing floorplans, so thank you. We’re we’re going to start out today talking about just how to look at a floor plan. So.

 

[00:01:13] Speaker 2 Yeah, so I’m going to try to put myself in the customer’s shoes and explain how I would go about looking at a floor plan so or a design. So first I wouldn’t look at the exterior, right? Because we’ve said this multiple times. You can put any face on a house, right? So don’t let the outside drive what you want for an interior design. So push that aside. I wouldn’t even focus on the second floor. It’s important, but the second floor is a lot to call it a derivative of the first floor. Right, right. And we can always design which you want on the second floor, four bedrooms, five, I mean, based on the footprint, number of bathrooms, blah, blah, blah. So it really is the first floor. And then what is the most important aspect in my mind of the first floor is picture this. You come up to the house, you open the front door and what do you see? Right. So what that means to me is where do you want the stairs? Are you more of a traditionalist and like the stairs in the foyer, or do you like a side stair or a switch back stair? At the end of the day, the stairs are the nucleus of the house, right? So all the modules are going to spring from the stair location, right? Right. So if you have a stair location, for instance, that puts you in an odd location at the second floor, you’re going to eat up a lot of hallway space trying to get to the bedrooms. Right? So it’s just really the nucleus. So you start by where is the stairs then? I would say 95, maybe 98% of our customers want an open floor plan. Specifically, they want to live in the back of their house, not in the back yard, but in the back quadrant of the of the first floor. So that’s prototypical, typically the kitchen and an eating area and a family room. Right. And they want that wide open. Right. Open concept. Open concept. Not everybody, but most people. So so now we have where’s the stairs? Are you interested in an open floor plan? And if so, it’s pretty typically kitchen and mostly eating and mostly family in the back. Right. Then you got to solve for what are the other modules. So for a long period of time everybody wanted the dining room, right? Right now not so much because if you get a large eating island and you have a nice eating area, right? The dining room may be just an expense you don’t need. You’re just paying for square footage or you move the eating room and create a formal dining room and use the kitchen, a large island, as your kind of family eating area. So you’ve got the dining room next, I would say would be study. A lot of people are working from home. Mm. So, so that’s important I would say. Then the next big thing aside from a mudroom and, you know, pantry closet would be okay, are you considering aging in place specifically for the younger generation with an older parent? Right. So do you need a room, whether it’s a study that can be converted or a let’s just call it a flex room, right? That can be used as a study or. Playroom or whatever. With a full bath. Right. And that is something that you and I see. I don’t know. I don’t most say maybe over 50% of our customers. If they’re not doing a true first floor owner’s suite are doing this kind of a smaller space with a full bath. Right.

 

[00:05:25] Speaker 1 Just in case room. Just in case somebody.

 

[00:05:27] Speaker 2 Just in case.

 

[00:05:28] Speaker 1 They can’t or they have surgery.

 

[00:05:29] Speaker 2 Or just the whole aging paging parents. So I would say that is those are the big the big things. Right.

 

[00:05:39] Speaker 1 So you just built a really great ladder, which which is awesome. So we start with the open concept in the back right kitchen bracket.

 

[00:05:48] Speaker 2 Well, we start with the stairs.

 

[00:05:49] Speaker 1 Right. The stairs. Exactly.

 

[00:05:50] Speaker 2 Then we go to, as you.

 

[00:05:52] Speaker 1 Said, exactly the the the open concept in the back. I’m going to circle back to the stairs in a second. So start with the stairs open concept in the back. And then how do you build the rest of the house around it?

 

[00:06:02] Speaker 2 What’s important?

 

[00:06:03] Speaker 1 Yeah, what’s important. The dining room is certainly important, I think, to a lot of people. Right. Not so much for there’s some people use the dining room as a flex room. Right. They don’t hang a chandelier. They’ll put some recessed lights in. They’ll use it as a flex room. When they want to sell the house, they can drop the the ceiling fan pre wire and put a chandelier in if they want. Right. So there’s lots of ways we can help folks get.

 

[00:06:23] Speaker 2 But just keep in the back of your mind. If you have a large enough kitchen island, let’s say it’s four or five by ten or 12. Yeah. You’re really eating there every night with your family. Exactly. So it’s it’s it’s what modules do you need? But thinking about every square foot is an additional cost. Right. And people who are looking at building a smart home. Smart meaning they want to pay for space that is really needed and not pay for space they may use once a year.

 

[00:06:53] Speaker 1 Right. And we can help folks talk about their lifestyle and figure out what’s what’s best for them. Yeah. So your open stairs, open concept in the back. Almost all all of our homes, almost all homes on the market have add, dining room add and.

 

[00:07:06] Speaker 2 Then also add dining room and think about, okay, dining room and morning and eating area and morning room and large kitchen island. Right. Is there a redundancy? Yeah. Do you need three.

 

[00:07:18] Speaker 1 Or four places to eat?

 

[00:07:19] Speaker 2 Yeah.

 

[00:07:19] Speaker 1 Right. Yeah. And then. And then the next most common module you’ll add is the office. And then then you can do a combo or a hybrid office that has a full bath. Right. And then I think the next level up from that is.

 

[00:07:32] Speaker 2 Well, I think there’s there’s a couple of other things. So for the traditional buyer, they’re going to then think Dining room. I need a living room. Yes. So it’s a much, much, much, much smaller segment of the buyers. Yes. But they’re still I know maybe only 15% of the buyers really want a living room anymore. It’s really going. Yes. Precipitously down. Yeah. And then the other big elements as I’m going to call most like not really add ons, but maybe almost extensions are a large rear call it almost called sunroom. Yeah, morning room where it’s really large and it’s lots of windows. People love, they enjoy that space. And then finally would be a screen porch. Right. So those would be mostly the modules then you can get into. Okay. Don’t want a three car garage. You’ll want a four car garage. You want a five car garage. But that’s kind of that can always be figured out. You got to start build the ladder, right. And it’ll come in terms of that, your design.

 

[00:08:39] Speaker 1 Exactly. So and then I think we’re going to talk in a second about first floor owner’s suite, which is a whole different concept. So right now we’re talking about you’re you’re thinking about buying or building a single family home. And this is how we would approach it. And one of the interesting things that that I’ve discovered over the years is I’ve always started with the stairs. You’ve taught me that you start with the stairs, and then you can be working with a homeowner or a prospective buyer for a period of weeks. And then you get the perfect plan, whether it’s one of our plans that we’ve added things to or whether you’ve customized a plan. And then they’ll say, Well, we love everything, but can we move the stairs over here? And, you know, and that’s an interesting phenomenon, you know. But I think when that.

 

[00:09:23] Speaker 2 Hasn’t happened that often, but when it does, you really take the paper, kind of roll it out.

 

[00:09:28] Speaker 1 Throw it.

 

[00:09:28] Speaker 2 Away, throw it away and it’s fine, right? I mean, that’s this is the time for a customer to dream. And it it’s their house. Yes. So if they decide to move the stair and start from scratch, we’re happy to entertain it.

 

[00:09:41] Speaker 1 Right. So the reason I bring it up for the folks listening is if you’ve brought yourself through the process and you’re looking at Floorplans and you figure out the perfect floorplan using our tools online by adding checking boxes, adding extensions and all that, or.

 

[00:09:54] Speaker 2 We’re sketching or working.

 

[00:09:56] Speaker 1 Right? And then all of a sudden you start to say to yourself, Oh boy, this is perfect, but I want to move the stairs over there. Then we got to regroup and have another conversation. So I just wanted it happens.

 

[00:10:05] Speaker 2 Correct. Correct. Correct. And the last thing I would say with regard to having a space for a potential aging parent is we always ask a couple of fundamental questions then. So by code, though, that door to the full bath. Mm hmm. And if it’s labeled a bedroom, too, the bedroom needs to be a three foot door right by code. Then the next question is, does the customer need a what I call a zero clearance shower so that there’s no threshold and you can literally just walk right in, no tripping hazard. Yeah, right. So a lot of times will will do that. Then the next pretty easy is blocking or installing grab bars. And then last night is important. But something that’s important to some people is if a customer wants space in that bath for a wheelchair, we have to make the bath a little bigger because you need a five foot turn radius, right? So we need to accommodate a wheelchair. Right. So those are the things we would normally ask if a customer is looking at some kind of first floor space.

 

[00:11:16] Speaker 1 Right. And in that case, we would be customizing a plan.

 

[00:11:19] Speaker 2 Yeah. Yeah. Well, we may have a plan that already has a full bath in a in a space that’s converted to a bedroom. So that could be just a part of one of the designs that we have. Right. The unique thing would be the zero clearance. And the unique thing would be the if needed. Right. Could already be this way. Right. A little bit of a deeper bathroom for a wheelchair if you need a wheelchair.

 

[00:11:44] Speaker 1 Makes sense? Yeah. Makes sense. Good. So that’s that’s a great way to transition into the first floor owner’s suite. So you’ve you’ve got a great way of approaching the main level. The first the first floor is is where folks live and where they spend their time. And as good as the first floor. So goes to second floor, I would think. Talk a little bit about an elevator. Let’s transition now to the first floor owner’s suite. So, yeah, so some folks will call me and say, hey, I want to have an owner’s suite on the main level and I want to get an elevator in there. What’s your thinking on that?

 

[00:12:15] Speaker 2 Well, it’s. Well, it’s redundant, right? Because the elevator. Well, I don’t want to say redundant. It’s it could be potential unnecessary calls. So if you’re looking for one floor living the first floor owner’s suite combined with the kitchen, blah, blah, blah is going to give you that. So then do you really want to either in the future or during the build, put in an elevator so that one of the occupants can get to the second floor, get to the lower level? Right. I would say the probability of a customer going that direction is about 2%. Right. But they may say that customer you know, if I do a first floor owner’s suite, I’m putting a lot of I’m increasing my footprint. Yes. We’re reducing some of the modules to try to reduce my footprint because now I got to have a first floor owner’s suite that’s of a decent size in a first floor owner’s bedroom and walk in closet. It takes space. Mm hmm. And so many customers will say, you know, I don’t really need it now it meaning to be limited to one level. So what if I just design stacked closets from the lower level to the first floor to the second floor with the ability in the future to put an elevator in? I would say for those type of customers, we’re doing it probably 75% of the time. It’s very easy. You know, we drop the concrete slab in the basement so the elevator can get all the way down to the lower level concrete or we put the elevator in, but now the customer has access one all levels and if they need it, if they need it, right.

 

[00:14:05] Speaker 1 So they may never have to put that elevator in. Right. And they use the space for closets, right.

 

[00:14:09] Speaker 2 Yeah. And it’s also a good marketing tool if and when they ever go to, to, to, to sell the house.

 

[00:14:14] Speaker 1 Right. So that’s for the buyer that wants the traditional main level, you know, living with the owner’s suite upstairs and they’re worried about future proofing.

 

[00:14:24] Speaker 2 Correct. Correct. And we do have some and we may be getting into this. We may we do have some plans where they’re multigenerational. So certain certain buyers have the responsibility culturally to take care of their parents. Right. And we see it very often where we need a first floor owner’s suite and we need an owner’s suite with secondary bedrooms on the second floor because there’s the family unit, right. With the. In laws on the first floor.

 

[00:15:03] Speaker 1 Right. And folks right now can go to we build on your Lidcombe and they can go to the grid and look at the Travis model and the Morgan model. Those are the most. And the Russell and the Russell. The Russell the Russell have.

 

[00:15:17] Speaker 2 Russell has. Yeah, both. And the Russell has a built in like kitchenette. Right. Kitchen area.

 

[00:15:23] Speaker 1 Like it’s almost a separate unit. Yeah. For the parent, right. Yeah. Yeah. So, so those we would call our multi gen homes. Right. Multigenerational homes where you have two generations, you have the option for two owner suites, one on the main level, one on the second floor.

 

[00:15:38] Speaker 2 So not to get too far afield, but for some customers and this has this has broader, broader criteria for not just people building new homes, but whether it’s Fairfax County or Loudoun County or just many of these counties have zoning ordinances that allow for an additional dwelling unit. Mm hmm. And and, you know, I would say we probably build currently we’re building two homes with additional dwelling units. Right. Right. And this is specifically for where instead of having a multi gen in one house. Right, it’s a multi gen, but there’s a detached living unit. Right, for, you know, and it’s got to meet the zoning standards. So we’re doing that more and more. We’re also being contacted by bi bay customers who own the lot. Yeah. And just want to build a, an attached dwelling unit, a detached. I’m sorry, DC touch. Yeah. A detached dwelling unit. Right. And so we’re doing that as well.

 

[00:16:54] Speaker 1 So we call it an Adu.

 

[00:16:56] Speaker 2 Adu Haiti. Yeah.

 

[00:16:57] Speaker 1 Yep.

 

[00:16:57] Speaker 2 Alternate dwelling unit.

 

[00:16:58] Speaker 1 Right? Exactly. Not attached. Exactly.

 

[00:17:00] Speaker 2 We could do.

 

[00:17:01] Speaker 1 Attach. Yeah. So if you have an existing home and you have the space and it works within the zoning ordinances, we can build a small.

 

[00:17:09] Speaker 2 And we’re doing it.

 

[00:17:10] Speaker 1 Necessary dwelling unit right on your property.

 

[00:17:12] Speaker 2 Yeah. It’s a great thing. There’s also I don’t want to get too far afield but you can check with these your your, your zoning, your specific zoning. But there’s, you know, you can rent depending on what location you can rent out these adus. And so we can generate income above other stipulations. But it’s a whole growing part. And that really started in California where the affordability was so difficult that I mean, a huge segment of California residents have alternate dwelling units to offset their mortgage payments.

 

[00:18:00] Speaker 1 Right? Right. Makes sense. Makes sense. So so let’s let’s kind of wrap up this first segment with talking a little bit about the owner’s suite on the mat. Sure. So so we mentioned the Russell and we have we have other plans that have we have one level Rambler plans, I guess.

 

[00:18:19] Speaker 2 Absolutely. To Jackson. We’ve got I mean, we’ve got we’ve got quite a few.

 

[00:18:23] Speaker 1 Right. So you can have your owner’s suite on the main level with additional bedrooms on the main level. So everything’s on my loving. You don’t even have a second floor.

 

[00:18:31] Speaker 2 Right. Or you have a second floor that’s maybe has two bedrooms.

 

[00:18:34] Speaker 1 Right. So maybe you have the owner’s suite on the main level with a couple of accessory bedrooms upstairs, right?

 

[00:18:39] Speaker 2 Yeah. Yeah. So it’s it’s surprisingly I never thought I would say this, you know, especially if you go back to the nineties where everybody wanted first floor owner suites and nobody would pay for them. Right now, many, many, many people want them and many, many, many people are building them now because of the aging population. Right.

 

[00:19:04] Speaker 1 Right. People want the option to age in place, not that they’re necessarily going to occur there, but they don’t want to be forced out of their home because they can’t go up and down stairs.

 

[00:19:13] Speaker 2 Correct. And then, you know, the other thing we haven’t spoken about, so we spoke about the first floor. Yeah. How really? Just focus in like a laser beam on the first floor. Second floor. Not as important because as goes the first. So goes the second. But four bedrooms, four bars, four bedrooms, three. That I mean, it’s kind of almost a plug and play, but in a way it’s kind of plug and play. Then though, I’m going to call it the last because it’s probably the most important element is the curb appeal, which is the front of the house, right? I call it the front elevation. Right. But it’s the front. What do you see when you drive up to the exterior? Right. So if you’re going to spend the money, you’re going to build a house. Don’t you want it to look? Nice from the street and people to get out of their cars and want to come in and say it. Yep. Yep. Right. So from a selfish perspective, we want to build highly appealing front elevations because it makes us as a company look good. Right. Right. We really want you to build a highly appealing front elevation, but we can do whatever the customer wants with offsets, with rooflines, with dormer features, with, you know, different color windows and just all kinds. I mean, you’ve seen it.

 

[00:20:35] Speaker 1 Just isn’t it amazing?

 

[00:20:37] Speaker 2 And we can people sometimes are like, well, how did you get from I mean, she has a flat front veneer, right, to have all these offsets and these open gables with lookouts and king post. And it’s just kind of like, well, you know, it’s what you said you wanted. Exactly. So we designed.

 

[00:20:56] Speaker 1 It. Exactly. Cool. So so we’re going to take a quick break. And when we come back, we’ll talk more about exteriors and elevations and trends in the marketplace. And we’ll be right back with more with Michael Schnitzer, President Stanley Martin, Custom Homes. All right. Welcome back to the second segment here with Michael Schnitzler, president of Stanley Martin Custom Homes. So thanks for sticking around, Mike.

 

[00:21:26] Speaker 2 Oh, my pleasure.

 

[00:21:28] Speaker 1 So let’s let’s talk a little bit about let’s let’s let’s continue the conversation about elevations. Right. And exteriors, elevation exteriors, same thing. Two different words. What do you see going on today in the industry from a stylistic. Sure.

 

[00:21:41] Speaker 2 Effective so I so so up until about three years ago maybe it was 90% arts and crafts that craftsman style. Right. Tapered columns Piers just the you see it all over the place. Right. That has kind of waned. Not that we’re still not building craftsman homes, but I would say the the significant number of homes being built now or designed are more modern farmhouse. So and you see this all over, you know typically it’s a it’s up like almost like a bright white siding. It’s got U.S. metal roofing. It’s got a lot of times dark windows, very clean lines. And so that’s kind of you know, in my mind, it’s like people really like and want to build more of a modern style home but are afraid to look to go too far and build a modern home, contemporary home. So the modern farmhouse really took hold, I would say, with when somebody is doing brick or brick elements with a modern farmhouse, typically we’re painting the brick to give it that white color or, you know, just off white color. But it is certainly a big part of what we’re seeing, what we’re designing now. Some customers will splash some stained grade material like could be stain grade posts for the porch or the beams on the porch may be stained grade. So they may splash a little bit of that stain grade material. But all in all, modern farmhouse is where the what excites people now. Right then, I would say there’s still some craftsman. Certainly we build some traditional homes. We also build and design. I don’t use the word large, but may be large. ESQ Homes where you have, you know, these large gables and these huge open beams and and and it it it almost looks like I don’t want to call it a lodge, but it it really has that feel. And, you know, I see more and more of that now. How far will that go into the mainstream of what people want? Right. Hard to tell. It’s certainly so. From a price perspective, a modern farmhouse is going to be less than a more a large front elevation where you got these big exposed beams and typically it’s stain. They’re stained and a lot of stone and blah, blah, blah. So but we’re definitely seeing that, you know, I would say in the modern farmhouse design, probably the the big thing customers going to have to come to terms with. So you could build a modern farmhouse and use white windows, right? I mean. Right, you see it. But, you know, dark windows, black windows, whatever are certainly more prevalent. And there’s certainly a price tag for those windows. So and it can address if you have 50 windows times X, it’s you know, it’s not just it’s one window. So that can get that can get pricey, but otherwise it doesn’t have to be crazy pricey to build a modern farmhouse. Right. If you do it nicely.

 

[00:25:41] Speaker 1 Exactly. That’s good to know. So, you know, another another thought that comes to my mind when I hear you talking about the modern farmhouse is when you walk inside the home. They’re really not that much different than the Craftsman Homes we were building. But there is a little it’s a little it’s a little more contemporary on the inside.

 

[00:26:00] Speaker 2 Yeah, I would say Ben’s a little contemporary. So. So I think what you’re getting at and what you and I talk with customers about is you don’t want to have a dichotomy of themes, right? Where let’s take two ends of the spectrum where you’re building a traditional front. Colonial. You walk in and you have a modern interior. Yes. Layout, not layout features. Right. I mean, people, like, do a double take. Like what? What just happened? Yeah. I just went through, like, a time warp, Alice. So, you know, I would say whether you do a modern farmhouse or you’re doing craftsman, even probably logic type, most people are going for the clean lines that tend to bend towards more of a modern, you know, whether it’s flat panel or shaker panel. It may be the interior trim is flat, maybe the doors are flat or just have a you know, not a lot of woodgrain. A lot of customers are are holding back on a lot of you know, I want to say gaudy trim. Right. So a lot of times we’re just wrapping the windows, really just kind of toning it down on the inside.

 

[00:27:19] Speaker 1 Clean and simple.

 

[00:27:20] Speaker 2 Clean and simple. And then where customers will splash some features is sometimes we’ll do some stained grade beams, maybe in the in the family room or in the in the kitchen morning room. But they’re trying to keep it simple. I would say the big splash is probably the kit, the open kitchen, right. With the the real high impact, you know, island countertop cabinets, typically cabinets to the ceiling like glass doors. Yeah. I mean, that’s the pop and that’s where most people are living in the back of their house.

 

[00:27:58] Speaker 1 Yeah, sounds good.

 

[00:27:59] Speaker 2 So.

 

[00:28:00] Speaker 1 So what do you see happening in the building industry?

 

[00:28:04] Speaker 2 Yeah. So I would say, you know, there’s always lessons learned large the very largest production builders learned a long time ago. Right. As a manufacturer to limit their SKUs.

 

[00:28:25] Speaker 1 Right. So SKU is a part number.

 

[00:28:27] Speaker 2 A part. Yeah, a part in their house because the efficiency is in not having 100,000 SKUs and use this as example, but getting to a thousand. Right, right. That’s simplicity in design and building. So if you look at so if you look at windows, right. So Windows, let’s say a company had a hundred different standard sizes, you know, small, large. You need some different sizes. Do you need 100? Right. Right. And one of the lessons learned was if you’re a manufacturer and you get an order from company A and company B and let’s say company says, I need you to make three window sizes set up your factory. Right? Company B says I need you to make 50 windows, set up your manufacturing. Right? Right. The manufacturer 100% of the time is going to that builder that has three windows to run because they can run it through a manufacturing facility a lot faster with less setup than if they’re doing 50 or 100. So you’re not going to be first in line or second in line or third in line. Right. So we’ve known that for a while and we’ve over the years limited our SKUs. But now we’re limiting them in a thought provoking way. Right. Not limiting them. Oh, it’s just whatever. But limiting them to put us in the best position for all supply chain, future current, whatever, because we realize as an industry it pays dividends, whether it’s windows or plumbing fixtures or whatever. The more complicated you are, the, the, the, the lower you are in the priority of the manufacturer. Right.

 

[00:30:30] Speaker 1 Right. And I think that’s good for the consumer, too, because when you buy a house, you want to get it built faster.

 

[00:30:35] Speaker 2 Yeah. And you’re going to be paying less money, right? So if I mean, think about if you’re a manufacturer and you had to set up 50 different times, your unit cost for Windows is going to be pricier than if it was just one setup. Right?

 

[00:30:49] Speaker 1 Right. So the world has changed.

 

[00:30:50] Speaker 2 So the world has totally changed in that respect.

 

[00:30:53] Speaker 1 So yeah. And going forward, it’s going to be, I think, a simpler way with probably a more diversified supply chain.

 

[00:31:01] Speaker 2 Yes, I think that’s one of the other lessons learned in terms of supply chain. Yeah. Yeah.

 

[00:31:07] Speaker 1 So another interesting.

 

[00:31:09] Speaker 2 You know, just I’ll just give you as another. So Stanley Martin entered an agreement with a large manufacturer who built a. First Stanley Martin I believe it’s finished now. And they’re only building Stanley Martin Windows.

 

[00:31:23] Speaker 1 And that’s incredible. Yeah. So we have a dedicated plant for Stanley.

 

[00:31:28] Speaker 2 And this I’m just talking for the D.C. Metro man, and I don’t know how far down it goes, but specifically to service DC and probably a little bit south. Yeah.

 

[00:31:40] Speaker 1 Yeah. So another interesting thing that’s happening that’s that’s changing in the world is we have corporations now are buying entire communities. Right. So Stanley Martin is that is the largest fastest was the fastest growing segment I would say is the.

 

[00:31:57] Speaker 2 Fastest growing segment.

 

[00:32:01] Speaker 1 Let me just jump in real quick and say so. So Mike and I. Stanley Martin, Custom Homes. We build about 50 homes a year. DC Metro area. Right now we’re kind of just.

 

[00:32:11] Speaker 2 Building on customers lots. We’re not a spec builder.

 

[00:32:14] Speaker 1 Exactly right. So right now we’re talking about the parent company. So Stanley Martin.

 

[00:32:18] Speaker 2 But we’re just talking about in general. So let’s let’s back up. So in general and you and I have said this for many, many years that all industry insiders know there is a significant shortage of housing. Yes. New homes.

 

[00:32:37] Speaker 1 Yes.

 

[00:32:37] Speaker 2 To meet the demand. And it’s been going on since 25, 26. So every year we keep falling further, further and further into a deficit. Right. So there is an enormous demand for homes that don’t exist. Right. So that’s that’s one. Number two is institutions. Have shifted their focus instead of buying apartments and are for economic reasons and are buying and building communities, single family communities for rent. Right. So it could be a community of 200 single family houses, you know, and in that case, daily, Martin goes in and builds every house and delivers the 250 houses to the investor, to the investor organization.

 

[00:33:31] Speaker 1 And that’s 200 homes or 200 people.

 

[00:33:34] Speaker 2 That typically Stanley Martin wouldn’t have built because these are like a business to business transaction to a to a institutional investor. And it represents for Stanley Martin, thousands of homes a year, thousands and thousands. So. So it’s not a small number. And I you know, because I’m not plugged into the production and I don’t know how that shows up in terms of certainly permits pulled it would show up. Right. But I’m not sure how that shows up in the stats. Right. In terms of new homes sold. But what we’re also seeing is rents in D.C. are sky high. Right. Right. And so we see, you know, people that, you know, years ago may have spent X for a one or two bedroom apartment are spending, what, 2125? I mean, it’s getting crazy. It is. And so people are like, whoa, wait a minute. Can I find a way to buy a house?

 

[00:34:38] Speaker 1 Right.

 

[00:34:39] Speaker 2 Right. And so you’ve got this this this increase in rental prices pushing buyers, even more buyers to the to the housing market, whether it’s multifamily, you know, like towns or. Yeah, yeah. Yeah. So there’s just regardless of what customers here. On the news. There is a large demand that many times they don’t see, especially with the institutions. Right. So if let’s just say the sales were taking up just ever so slightly. Right. The the the the buyer doesn’t see these institutional sales. Right. That are increasing the demand on the manufacturers. Right. Right. Right. They just don’t see it. But it’s there and it’s real. Right.

 

[00:35:36] Speaker 1 So and I think it’s also impacting the market because these are homes that might have been sold to the consumer, that the consumer will never have an opportunity to buy, at least when they’re brand new, because they’re being sold to institutions.

 

[00:35:51] Speaker 2 And I think and again, I’m not studying the market dynamics, but I what is it the Gen Z? And I don’t even know all the gen terms or whatever. But you know, there’s also the dynamic of there’s a lot of people that want to travel or whatever and rather rent a house. They buy a house. I don’t particularly understand that thought process, but that’s kind of the dynamic. Yep. So it’s just there’s a lot of interesting things going on in the industry. But I would say what you see above the line is the demand on I’m going to call them used and new homes from a buyer which you’re not seeing below the line is all these large builders like Stanley Martin building. I don’t even know how many at well over 10% of the starts this year will be for investors. Right. Institutions, rather.

 

[00:36:48] Speaker 1 And they’re buying the whole community. Yeah. They buy the whole community.

 

[00:36:51] Speaker 2 They think it may be up to 15 or 20%. I mean, it’s a huge chunk of the building industry now. So you don’t see that in the you don’t it doesn’t necessarily show up in anything other than if the labor pool is still busy. Right. Many factors are still making parts and pieces. It may not be for the new home buyer. It may be for the institutional buyer.

 

[00:37:17] Speaker 1 Yeah, it makes total sense. So. Perfect. Well, Michael, as always, you come in here with a wealth of knowledge and information that just helps us all do our jobs easier.

 

[00:37:29] Speaker 2 So thanks, John, and see you next time.

 

[00:37:33] Speaker 1 That sounds good. Well, that wraps up another episode of the Go with John Show. Go out there and build something extraordinary.

 

[00:37:40] Speaker 2 There you go. Bye bye.