More Bang for Fewer Bucks

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Hot housing markets do not always guarantee building success; in fact, they sometimes present their own set of contradictory conditions. For instance, an influx of people can drive the market value of homes up to a point where young buyers have a hard time finding affordable housing. Likewise, existing residents may not want lower-priced homes built in their neighborhoods for fear of lowering their own increasing property values.

In Boulder County, Colo., that is exactly what Johnson Communities faced when they planned its Meadows Series of affordable homes. Already successful with the Country Series, priced well below the county average in their Country Meadows community in Erie, Colo., brothers/builders Craig, Court and Tyler Johnson planned this complementary series at an even lower price point.

“Within the bell curve of the county’s income range, there was definitely room for another affordable product,” says Craig. He says that while they were building the Country Series, many of their customer registration cards came back with requests for a similar but lower-priced product.

The Meadows Series includes five floor plans ranging in size from 960 to 1480 sq. ft., including ranch, two-story and multilevel designs. The plans come with luxuries like lofts, dens/studies, large master suites and multiple baths. Two-car garages are standard with all plans, while basements are optional on some plans. They are priced from $135,900 to $162,900.

One of Johnson’s first considerations was the effect a lower-priced product moving next door would have on the community and how current homeowners would react. Indeed, there were several outspoken critics of the Meadows series when it was first proposed, but when those people saw what Johnson Communities had planned, they quickly showed unanimous support. In fact, most current landowners signed a petition in support of the new project.

"What really pushed the community and the associations to our side was the fact that our new product is consistent aesthetically with the existing product, even though it is smaller and more affordable," says Court.

The brothers also pointed out to the community that this project would "seed the area" with buyers who typically like to stay put and thus become future move-up buyers. While the existing series of homes was aimed at dual-income families, the Meadows Series was aimed at young professionals within the county’s high-tech economic base who are living the single-income lifestyle.

"These types of buyers typically make some compromises [in first-home purchases] knowing they are probably going to enjoy some success and move up in their jobs," says Craig.

Those compromises are far from apparent in the Meadows Series. While smaller than the more luxurious and expensive Country Series, this new line of homes has higher bedroom counts and functional living spaces aimed at accommodating growing families. To achieve this combination of functionality and affordability, Johnson Communities came up with a list of 23 construction parameters aimed at keeping construction costs way down while delivering an aesthetically pleasing product.Some of these parameters, set by mutual agreement between construction management and the trades, are:

• Keeping floor and wall surface areas consistent with material dimensions to minimize waste;
• Setting maximum countertop runs of 7’8" (laminates come in 88 runs);
• Centralizing the furnaces to minimize ductwork;
• Creating back-to-back and stacked plumbing wherever possible;
• Aligning the second stories with garage beams;
• Creating consistent window sizes, and
• Locating appliances as close together as possible to minimize electrical runs.

These design-for-installation parameters, in addition to saving time and materials, are also expected to minimize the need for service and warranty after the sale. The savings, both immediate and expected, were then applied to the exteriors of the homes, beefing them up over what Johnson was offering on its larger series. Vine porches over the garages, three-tiered 16 - fascia, unique trim detailing, special trellis work, and rear elevations showing shutters and optional decks are a few of the extra touches buyers are enjoying. "We were going for a low-end BMW-type of exterior on these homes," says Craig.

Tracy Perret, community sales manager at Country Meadows, says the company is enjoying great success with this new series. "We’re reaching our target market in both series, and we’ve got waiting lists for both of them." She says the customers are really drawn to the price point and open floor plans, and Johnson Communities has had to hold back on sales until the construction side catches up.

Perret states that weekly advertising in both area newspapers has done much to increase traffic flow through the models, but referrals are also a significant contributor. "We get a lot of word-of-mouth traffic, especially from previous buyers who work at (major area employer) Sun Microsystems," says Perret. This has led to an average of 16 home sales per month for the community with approximately 200 zoned lots.

Johnson Communities knew its success with its first line of homes boded well for a lower-priced product, if done correctly. "The trick is getting into that price bandwidth with a product that works," says Court.

The Johnson brothers have been in this industry for many years, beginning with Pulte Homes (their father, Howard, was CEO of Pulte Homes in the ’70s and serves as the brothers’ "chief advisor" today), and Johnson Communities builds affordable and custom homes in Colorado, Nevada, Texas and California.

"We’ve been in this business a long time, but we’re still learning about refinement of basic value engineering," says Court. He credits his construction vice president, Terry Higgins, and Lonnie Frank, the project manager, for devising the parameters and driving the project.

"Our construction people had some great ideas," says Court, pointing out that they were very sensitive to the aesthetics and feel of the entire project. "They produced a project that has been extremely successful and profitable for us."