Builder Insights
A Word From Mark Refosco
Awards are nice…BUT…I remember when Art Rutenberg presented me with the Rookie of the Year Award during my second year as an Arthur Rutenberg franchisee. I was thrilled that he and the team at AR Homes recognized our efforts, but when I told him so, he said “Yeah, it’s just an award, and at the end of the day they really don’t mean that much,” and went on to a conversation about how he thought we could be doing better.
He took the wind from my sails, but years later I understood exactly what he meant. After all, Art was a legend in home building and had received hundreds of awards. I am fortunate for having the opportunity to spend so much time with Art as he shared with me the “long view” of home building.
He taught me to build a five-year business plan when I could hardly think of what I was going to do the next day. He taught me patience, which I’ve had to work hard to develop. He taught me to focus on “what’s right and not who’s right,” as it would always prove to be the right.
And most importantly, he told me to hire the best people I could possibly find and then get out of their way and allow them to do their job. Being a bit of a control freak, this was the hardest lesson to learn, but I finally did. Today, we have a team of people rowing in the same direction under the leadership of Bill Goreschak, Building Company President. Supporting Bill, Joan Refosco leads our sales teams and model home development. Together, Bill and Joan lead 25 internal team members and over 300 vendor partners to deliver quality luxury homes to our incredible customers.
When I finally understood Art’s advice and stepped back, things at Marcus Allen Homes really began to hum. The awards are nice, but the satisfaction from our customers is the real reward for our internal team and our external team of vendor partners.
Building any home, and particularly a high-end luxury home, requires a huge team of people, the management of thousands of products which are ever changing, adjusting for weather conditions, site conditions, government agencies, and compounded today with supply-chain issues and skyrocketing inflation, I find it amazing we can get anything built. How often do you drive through a fast-food joint and actually get what you ordered? I happen to love food that comes through a window, so I consider myself an expert.
In addition to “bragging” about our awards in this second Marcus Allen Homes newsletter, we’ve included insights on Smart Home Technology (home automation) and cabinetry. Everyone has a Smartphone these days. My Smartphone spends much of its day making me feel stupid, but they are in our lives for good. The automated home of today allows you to control virtually all of the homes systems from your phone from anywhere in the world with an internet connection. Cabinetry has always been a huge component of every home, and we have partnered with the best of the best, The Cabinetry Studio, led by owner Mike Schoenfeld. Cabinetry defines a kitchen and, along with flooring, sets the tone of the home.
Lastly, I’d like to share with you some news about the housing market. As I’m sure you have heard/read, there is a short supply of housing available in the US. The number of housing “units” needed in the US is about 1.4 million units annually. Starting with data from 1996 and using the base housing units of 1.4M, which most economists agree is the right number, we began building more homes annually, creating a surplus. In 1996, the surplus was just under 77,000 units. That number grew consistently through 2006 with a cumulative surplus of 3,357,600 units.
The dramatic increase in new home building began in 2002 when the banking regulations changed. When you hear of a novice person who tells you he/she just bought 12 condo units and came away from the closing with money in their pocket, you know something is wrong.
Sure enough, the Great Recession hit. Beginning in 2007, new home construction fell below 1.4M units annually, and this deficit continued through 2020 (last year). The accumulated deficit peaked in 2020 and was -2,114,600 units. In 2021, we delivered 1,550,000 new units or a surplus that year of 150,000 units. If our industry continues to build a surplus of 150,000 units annually, it will take over 22 years to get to a balancing point.
It won’t take that long, because the curve is adjusting faster but the “experts” believe it will require a solid 10 years to get to a balanced number. The pace of construction is largely being held back due to supply-chain issues. It’s taking developers longer to develop new communities, and it’s taking builders longer to build homes.
Factories shut down due to COVID 19…and it takes a long time to get a factory back on line. Many workers are not returning to work for various reasons, which I won’t get in to. I just read a housing article this morning titled “Jacksonville, the Worst Kept Secret.” Up until last year, about 20 percent of our buyers were from out of town and 80 percent local. That number has flipped almost exactly.
Warm regards,Mark
Mark Refosco
Owner, Marcus Allen Homes, Inc.