25 Years of Builder and Developer Magazine: A Look Back

This year marks the 25th anniversary of Builder & Developer magazine, marking a time of more than one real estate cycle, and a time of great change in the building industry.

I still remember the nascent publisher Nick Slevin making the rounds at PCBC in the early 1990s, and as both his influence and readership grew, I knew this was a magazine for which I wanted to write.  Having first entered the building industry in 1986, I’ve seen big changes in everything from product design and quality to how we market and finance new homes.

To be sure, this is a much different industry today than it was in 1990:  Back then the top 10 largest builders in the country reported a collective market share of under 10 percent of the housing market versus 17 percent in 2014 (down from 20 percent in 2008).  Back then new housing starts totaled 1.19 million for a population of 250 million (a ratio of .477 percent) versus 1.003 million in 2014 for a population of 319 million (a ratio of .314 percent).

Back then 75 percent of housing starts were for single-family homes, whereas in 2014 that share had fallen to 65 percent.  In fact, more multifamily units were started in 2014 than in any year since 1989. And yet, despite surpassing the one-million unit level in 2014, residential construction for the year still lagged below any level posted from 1959 through 2007.

Without a doubt, the housing recovery did lose some of its steam in 2014, with homeownership rates falling to a 48-year low by the second quarter of this year.  But that’s been somewhat balanced by strong growth in rental households, encouraging traditional for-sale builders such as Lennar and Toll Brothers to build rental communities in order to provide more predictable cash flow.

Another big change has been the shift from large builders focusing on specific niches -- such as entry-level, move-up or luxury homes -- to broadening their scope depending on local conditions. As a result, the importance of valid, verifiable quantitative market research -- coupled with qualitative local expertise -- has never been more crucial to avoid product, pricing and marketing blunders.

Having once worked for a builder which went bankrupt trying to grow too fast in new, unfamiliar markets while failing to appropriately address higher marketing and merchandising costs, I can attest that following gut instinct simply doesn’t work as well in a much more complicated world.

However, even given the bright spot for rental housing, with rents rising faster than incomes can keep up, affordable housing remains an elusive goal for both producer and consumer.  Over the 10-year period between 2005 and 2015, the share of renters aged 25 to 34 paying more than 30 percent of their incomes for housing rose from 40 to 46 percent. Now, more than ever, there is a rallying cry for more affordable housing, which also continues to evolve in order to fit in more seamlessly with existing neighborhoods.

If you have access to HBO, I highly recommend watching the six-part mini-series “Show Me a Hero,” which chronicles how civil rights violations in affordable housing impacted the city government of Yonkers, N.Y. at the beginning of the 1980s.

Based on a book by the same name, the series covers the very rocky political transition from the crime magnets of high-rise ghettos to low-income units scattered throughout a community in multiple flat and townhome unit configurations -- much like many affordable housing projects see being built today.

Finally, another big change over the last 25 years relates to the importance of technology in our homes.  Whereas many builders previously left money on the table to post-sale, outside vendors beyond their control (and balance sheets), today the connected home is a critical element in new homes, with over 90 percent equipped with a broadband Internet connection in order to better enable “the Internet of Things.”

Moreover, according to a recent CEA report, about one-third of builders report increased revenue from installing these technologies.  And it’s not just consumers leading the way:  Architects are also playing a key role in this area, incorporating multi-room audio, home theater and security systems into their designs.

Looking ahead, it’s hard to predict where we’ll be in another 25 years, but as the industry -- and its customers -- continue to become increasingly sophisticated, it’s safe to say that we can look forward to many exciting innovations in the way we work, live and play in our communities.

The Powerwall - Tesla’s Latest Innovation Takes Off

A guest post by Beth Kelly

"The issue with existing batteries is that they suck. They're really horrible." Elon Musk chuckled to himself and flashed the crowd a sly grin before proceeding with his announcement.

It was April 30, 2015.

Musk, multi-billionaire and celebrity innovator, stood beside a gargantuan screen showing dirty smokestacks and glossy blue solar panels, a subtle homage to his work as chairman of SolarCity, the nation's largest residential solar system installer. It was there, in the Tesla Hawthorne Design Center in southern California, that Musk revealed what he believed could "fundamentally change the way the world uses energy" - the Tesla PowerWall.

The PowerWall is a lithium-ion battery. A big one. It is hip, white, shiny and sold in two versions: a $3,000 7-kilowatt battery for daily use and a $3,500 10-kilowatt battery for backup power. Both weigh about 220 pounds and come with a 10-year warranty.

According to Musk and the Tesla Press Kit, the PowerWall is practically one-of-a-kind. Here's how it works:

• Its betrothed partner is a rooftop photovoltaic solar system. During the day, an included charge controller feeds the battery with excess solar power, and at night, the battery returns the favor.
• The PowerWall can also function as a backup battery to survive the inevitable winter storm grid blackouts.
• Customers dependent on the grid can charge the battery at night, when rates are low, and discharge the battery during the day, when rates are high.
• Multiple batteries can be wired in parallel to increase storage capacity.

Musk mentioned all this and more that day at the Hawthorne Design Center. Clad in a casual blazer and dark slacks, he clicked and grinned his way through a keynote PowerPoint address and a simple message: If the world doesn't want to wind up in the way of Mad Max: Fury Road, humanity must transition from combustible fossil fuels to renewable energy sources.

Many critics called his presentation unpolished and off-the-cuff. To others, his halting speech and gratuitous hyperboles came across as humble, straightforward. If Musk says his $3,500 battery can change the world, then it had better start a-changing'. And if Musk says all other batteries are "stinky, ugly, bad in every way?" then who is to say otherwise?

SolarCity would.

SolarCity is a co-venture of Elon Musk and his cousin, Lyndon Rive. The company installs and finances rooftop solar systems nationwide and, despite its close ties to Musk and Tesla, has opted not to offer the 7-kilowatt daily-cycle PowerWall battery because it doesn't make financial sense.

Under current laws, most solar-powered homeowners can sell excess energy back to the grid under net metering regulations. Why pay $3,500 for a battery to store energy when you can simply sell it back to Uncle Sam?

So SolarCity only offers the 10-kilowatt PowerWall, the one designed for backup power. Yet SolarCity spokesman Jonathan Bass says the 10-kilowatt PowerWall, which is optimized for 50 charge cycles per year, can supply only two kilowatts of continuous power. In other words, you can't run a hair dryer and air conditioner simultaneously.

One more kicker: Tom Randall of Bloomberg News noted that whereas one could purchase a 16-kilowatt gasoline generator from Home Depot for $3,700, a similarly sized array of Tesla PowerWall batteries would cost $45,000 for a nine-year lease from SolarCity. An outright purchase of a single battery system, inverter, installation and all, would cost $7,140 from the same provider.

With the numbers so gray, how is the Tesla PowerWall supposed to change the world?

Through faith.

Just seven days after the April 30 product reveal, Tesla stated in its first-quarter earnings call that all PowerWall products were sold out until mid-2016. More than 38,000 reservations had poured in from hungry early adopters. The response had been "crazy off the hook," said Musk.

The product, per se, is not revolutionary. And all other modern batteries do not "suck." In Germany, lithium-ion storage batteries from Bosch and Samsung are standard fare. In the United States, companies like JLM Energy , CODA Energy and Iron Edison offer competitive energy storage systems.

But what is revolutionary is that, for the first time, Average Joes and not just doomsday preppers are thinking about home energy storage. People are opening their wallets not to save money but to save the earth. It is not the PowerWall – nor its creator – but its 38,000 customers who are the true revolutionaries.

As customers grow, the costs of ownership will decline. Cleantechnica says that if those costs drop far enough, and if enough homeowners invest in renewable energy generation and storage, then the very nature of the electric grid will change. Accord to Columbia Gas, utility companies will no longer be able to simply charge per kilowatt but will evolve into service providers, intelligently directing power where it is needed most. There will be no more wasteful "peaker plants." No more triple-digit utility rate hikes. No more verdant mountaintops sacrificed to the god of coal.

Maybe, just maybe, it could fundamentally change the way we use energy.

About the author:

Beth Kelly is a freelance writer and blogger based in Chicago, IL. A graduate of DePaul University, she’s passionate about covering the in clean tech and other innovations driving the renewable energy movement forward. She is a strong advocate of the “maker movement” and green, self-sufficient living. You can find her on Twitter @bkelly_88