providing a better housing...

Providing a Better

Housing ExperienceHousing Leadership Summit • May 11, 2015

Sam Rashkin

CERTAINTY

Certainty = Hard Trends

YoungerBuyers

IncreasingInformation

IncreasingInnovation

Homebuyers Getting Younger

YoungerBuyers



78 Million Gen-Y Consumers

• Debt

• Sharing Economy

• Delayed Commitment

• Crash Experience

Gen-Y Challenge

YoungerBuyers



Gen-Y Opportunity

Willing to Pay More for a Better Experience.

Technology + Design Health

Sustainability Ambiance

Lots

600% 100%

100%?%

Gen-Y Opportunity Personal ObservationYoungerBuyers



41% of Gen-Z said they would willingly pay a premium for

“healthier” products.

That compares with 32% of Millennials (ages 21 to 34)

and about 21% of Baby Boomers (about 50 to mid-

60s).Nielson Global Health and Wellness

Survey, February 201530,000 people in 60 countries

Gen-Y/Z Opportunity Survey Data

YoungerBuyers



Gen-Y Opportunity Market DataYoungerBuyers



Information Parity:

Caveat Venditor

Information Asymmetry:

Caveat Emptor

More Informed Buyers

YoungerBuyers



More Informed Buyers

YoungerBuyers



What We Know Buying a CarYoungerBuyers



Design• Appearance• Size• Function• Details

Durability• Repair Record• Recalls• Reputation

Performance• Efficiency (MPG)• Acceleration• Handling• Safety/Crash Tests

Value• Awards• Special Recognition• Expert Reviews• Owner Reviews

Cost• Invoice Price• ‘Great/Good/Fair’• Resale Value• Maintenance Cost

Sales• Brand Reputation• Sales Process• After-Sale Service• Warranty

What We Will Know Buying a Home*YoungerBuyers



Design• Appearance• Size• Function• Details

Durability• Repair Record• Moisture Risk• Disaster

Resistance• Reputation

Performance• Efficiency (HERS)• Comfort• Health• Water Use

Value• Awards• Special Recognition• Expert Reviews• Owner Reviews

Cost• Sticker Price• Ownership Cost• Resale Value• Maintenance Cost

Sales• Brand Reputation• Sales Process• After-Sale Service• Warranty

* In addition to location

Our World is Changing FasterYoungerBuyers



YoungerBuyers



Our World is Changing Faster

“Accelerating rate of change is as certainas the sun rising in the east…

It’s going to sweep across our landscape like the technological tsunami it is….

It will disrupt catastrophically every aspect of every industry…

—except for those who see it coming.”

Daniel Burrus, “Flash Foresight”

Accelerating Change

YoungerBuyers



• Kodak

• Polaroid

• Motorola

• Palm

• A&P Food Market & long list of other retailers

• American Car Manufacturers

• TWA and other Legacy Airlines

• Converse Sneakers

• and the list goes on…

Innovation Graveyard

YoungerBuyers



Despite the importance of the housing industry to the national economy,

there is very little investment in residential technologies…

it can take 10 to 25 years for a new housing technology to achieve full market penetration.

Source: ‘The Diffusion of Innovation in the Residential Building Industry,’ Center for Housing Research Virginia Tech and NAHB Research Center. Jan. 2004

Housing Innovation…Not So Much

YoungerBuyers



YoungerBuyers



Liquid Networks Silos

Adapt Exist. Parts/ Nourish New Ideas

Stick withWhat’s Worked

Happy Accidents Widely Dispersed

Make Errors/ Adapt What Learn

Fear ofMistakes

New Platforms Fear of Change

Housing Innovation…Why Not So Much

YoungerBuyers



Housing Innovation Opportunity

Community Quality SalesDesign Performance

Provide Better Experiences

For More Informed Buyers and

Innovation Junkies

Module 1 Module 2 Module 3 Module 4 Module 5

MODULE 1:

COMMUNITY INNOVATION

OPPORTUNITIES

Module 1 - Sustainable Land Development

What is a Sustainable Community

Walking Spaces

Activity Spaces

Social Spaces

Optimized Natural Comfort

Quality Landscaping

Quality Hardscaping

Ensure Maintained Properties

Architectural Integration

CommunitySpaces

EnduringValue

QualityFeatures

Urban Preference Hard Trend?Community

SpacesQuality

FeaturesEnduring

Value

Sustainable Development?Community

SpacesQuality

FeaturesEnduring

Value

http://votkak.net/fakt/full-link

Sustainable Development?Community

SpacesQuality

FeaturesEnduring

Value

CommunitySpaces

QualityFeatures

EnduringValue

Savannah, GA

Savannah, GACommunity

SpacesQuality

FeaturesEnduring

Value

Community GardensCommunity

SpacesQuality

FeaturesEnduring

Value

Community Dog Parks with WaterCommunity

SpacesQuality

FeaturesEnduring

Value

Tech/Coffee CentersCommunity

SpacesQuality

FeaturesEnduring

Value

Community Shared Equipment ShedsCommunity

SpacesQuality

FeaturesEnduring

Value

Quality LandscapingCommunity

SpacesQuality

FeaturesEnduring

Value

Quality HardscapingCommunity

SpacesQuality

FeaturesEnduring

Value

N

S

EW

Natural Comfort IntegratedCommunity

SpacesQuality

FeaturesEnduring

Value

Village Homes:Davis, CA

1. Glare-Free Views

2. Free Heating and Cooling (~25%)

3. Superior Radiant Comfort

4. Natural Lighting

5. Natural Cooling Breezes

Natural Comfort Consumer ExperienceCommunity

SpacesQuality

FeaturesEnduring

Value

$0*

*Possibly small additional design/planning resources

Natural Comfort Builder/Developer CostCommunity

SpacesQuality

FeaturesEnduring

Value

Village Homes in Davis, CACommunity

SpacesQuality

FeaturesEnduring

Value

Module 1 - Sustainable Community

Innovation Recommendations

Choose your preferred development style, but always:

• Create Community Spaces: Provide open space for gathering, activity, and walking

• Employ Quality Features:Optimize street layout for south orientation

Invest in landscaping, hardscaping with experts to do it right

• Ensure Enduring Value: Lock in integrated design; developers use plan books

Protect future value with HOA covenants

MODULE 2:

DESIGNINNOVATION

OPPORTUNITIES

[4 factors]

[5 features]

[10 principles]

[3 elements]

[10 systems]

Fit toSite

NaturalComfort

Right SizeRight Way

IntegratedSystems

Architectural Integrity

Module 2 – Good Housing Design

What is Good Housing Design

Regionally Inappropriate MaterialsFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Brute-Force Comfort HomeFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Regionally Appropriate/Natural ComfortFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Regionally Appropriate MaterialsFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Natural Comfort HomeFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Linkage to OutdoorsFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Color, Trim, Built-in FurnitureFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Color, TrimFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

High-Quality LightingFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

High-Quality Trim, HardwareFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Built-in FurnitureFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Architectural IntegrityFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Portofino, Italy

Complex Architecture, Layout, MaterialsFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Complex RoofsFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Facade ArchitectureFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Integrated DesignFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Think of it like Chipotle

Integrated Design: Simple MenuFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Integrated Design: Great Core IngredientsFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Integrated Design: Great ToppingsFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Integrated Design: Lots of CustomizationFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Integrated Design: OutcomeFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

• Less Waste

• Better Use of Assets

• Superior, Less Frustrating Sales Process

• Greater Customer Product Satisfaction

• Less Marketing Costs

Integrated Design: Simple MenuFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Integrated Design: Great Core IngredientsFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Integrated Design: Great ToppingsFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Integrated Design: Lots of CustomizationFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Integrated Design: Sales SolutionFit toSite

NaturalComfort

Right SizeRight Way

IntegrityIntegrated

Systems

Module 2 – Good Housing Design: Design Trumps Everything

Innovation Recommendations

• Invest in Experts[interior design, color, lighting, technology]

• Design for Site and Region

• Optimize Natural Comfort

• Right-size, Than Invest Savings in Quality[built-in’s, trim, hardware, finishes, colors, lighting design, indoor/linkages]

• Be Better than Complexities and Fads

• Integrate Designs with all Major Systems

MODULE 3:

PERFORMANCEINNOVATION

OPPORTUNITIES

ComprehensiveBuilding Science

EfficientComponents

ComprehensiveIAQ

DisasterResistance

WaterConservation

[4 Strategies]

[4 Key Components]

[3 Strategies]

[3 Strategies]

[3 Strategies]

Module 3 – High-Performance Homes

What is High-Performance

60%

50%

40%

30%

20%

10%

0%

-10%

-20%

1986 1994 1998 2004 2009 2012 2015

Bldg.

Sci.

Tipping

Point2006

2009

2012

15%30%

2015

Code

Energy

Eff.

Rigor Bldg. Sci. Imperativ

e

Welcome to Energy Efficiency Risk Zone

BuildingScience

EfficientComps.

CompleteIAQ

WaterEfficiency

DisasterResist.

1986 1994 1998 20042009 2012 2015

50%

40%

30%

20%

10%

0%

-10%

-20%

• Adv. Insulation System– More Insulation

– Quality Installation

– Complete System

• Advanced Windows

• More Air Tightness

• More Rigorous Codes

• Lower HERS Scores

• Voluntary Programs

Energy Efficiency Risk DriverBuildingScience

EfficientComps.

CompleteIAQ

WaterEfficiency

DisasterResist.

Comprehensive Building ScienceBuildingScience

EfficientComps.

CompleteIAQ

WaterEfficiency

DisasterResist.

• Colder Walls

• More Wetting Potential

• Less Drying Potential



– Complete System



Water Protection System:• Roofs

• Walls/Openings

• Site/Foundation

• Materials

• Vapor Control Layer

• Colder Walls

• More Wetting Potential

• Less Drying Potential


EfficientComps.

CompleteIAQ

WaterEfficiency

DisasterResist.

• Ultra-Low HVAC Loads– Lower Air Flow/Mixing

– Longer Swing Seasons

– Less Humidity Control



– Complete System

• High-Perf. Windows



EfficientComps.

CompleteIAQ

WaterEfficiency

DisasterResist.

Optimized Low-Load Comfort System

– Efficient Equipment– Right-Sized/Variable Speed– Properly Installed – Complete (Heating, Cooling, &

RH)– Tested


EfficientComps.

CompleteIAQ

WaterEfficiency

DisasterResist.

• Ultra-Low HVAC Loads– Lower Air Flow

– Longer Swing Seasons

– Less Humidity Control

Efficient ComponentsBuildingScience

EfficientComps.

CompleteIAQ

WaterEfficient

DisasterResist.

• Solar Ready Home

• Efficient Components

• Components and MEL’s = >50% Energy Use

• Ultra-Low Space Conditioning Loads

Indoor Air QualityBuildingScience

EfficientComps.

CompleteIAQ

WaterEfficiency

DisasterResist.

• Less Dilution

• Less Filtration



– Complete System



• Complete IAQ System:– Contaminant Control– Fresh Air System– High-Capture

Filtration


EfficientComps.

CompleteIAQ

WaterEfficient

DisasterResist.

• Less Dilution

• Less Filtration

Indoor vs. Outdoor Air Pollutants:

On average 2-5 times greater

Up to 100 times greaterWhile Americans Spend

90% of time indoors

Source: EPA


EfficientComps.

CompleteIAQ

WaterEfficient

DisasterResist.

“If your child doesn’t use an inhaler,consider yourself a lucky parent because,

1 in 10 children in the U.S. suffers from asthma.”

Source: Remarks for Administrator McCarthy, Announcement of Clean Power Plan,

Washington, DC, June 2, 2014


EfficientComps.

CompleteIAQ

WaterEfficient

DisasterResist.

$20 Billion$40 Billion

Willingness to Pay for HealthBuildingScience

EfficientComps.

CompleteIAQ

WaterEfficient

DisasterResist.

BuildingScience

EfficientComps.

CompleteIAQ

WaterEfficient

DisasterResist.

Water Efficiency Imperative

• Indoor Fixtures- Plumbing Fixtures

- Appliances and Other Equipment

• Distribution- Service Pressure

- Metering (for Multi-Family Homes)

- Leak Prevention

- Hot Water Distribution

• Outdoor- Landscape Design

- Irrigation (if installed)

BuildingScience

EfficientComps.

CompleteIAQ

WaterEfficient

DisasterResist.

Water Efficiency System

• WeatherResistance

• Natural EventResistance

• PestResistance

Disaster Resistant SystemBuildingScience

EfficientComps.

CompleteIAQ

WaterEfficient

DisasterResist.

• Floods

• Wildfires

• Earthquakes

• Wind (all regions)

• Hurricanes

• Tornado or Hail

• Severe Winter Weather

• Termites

• Integrated Pest Man.

Module 3 – High-Performance Homes

High-Performance Innovations

• Commit to high-performance from top down

• Hire or Retain a ‘Home Performance’ Expert to oversee all construction decisions

• Invest in all five high-performance components for comprehensive risk management

• Hold trade partners accountable to high-performance standards/training

MODULE 4:

QUALITY INNOVATION

OPPORTUNITIES

QualityAssurance

LeanProduction

ProvenInnovations

[6-Step Process]

[7 Forms of Waste]

[3 Strategies]

Module 4 – Quality Home Construction

What is Quality Construction

Applying Proven Innovations Strategically

3 Strategies:

• Check the Building Science

• Check the Ingredients

• Verify Durability

Quality Assurance

LeanProduction

ProvenInnovations

Building Science Failures

• “Ghost Mark” Complaints with Steel Framing

• Manufactured Stone Veneer Moisture Problems

• EIFS Dry Rot and Mold

• Rot and Mold Without Window Pan Flashing

• HUD Code Vinyl Interior Wall Mold Problems

• SIP Roof Moisture Damage in Juneau, Alaska

• Early Heat Pump Comfort Problems

• California Multi-Family Class-Action Litigation

• Mid-Rise Wood Frame Building Failures

Quality Assurance

LeanProduction

ProvenInnovations

Ingredient Failures

• FEMA Trailer Health Problems

• Urea Formaldehyde Insulation Health Problems

• Chinese Drywall

Quality Assurance

LeanProduction

ProvenInnovations

Durability Failures

• Cracked Foundations with Expansive Soils

• Fire-Retardant Treated (FRT) Sheathing

• Hardboard Siding

• Polybutylene (PB) Plastic Water Pipe Leaks

• Aluminum Electric Wiring

Quality Assurance

LeanProduction

ProvenInnovations

Module 4 – Quality Home Construction

Quality Home Construction Innovations

Invest in:• Comprehensive Construction Documents

• ‘Building Science Manager’ Responsible for:- Comprehensive Building Science- Durability- Ingredients

• Quality Assurance Processes

• Lean Production Practices

• Proven New Technologies/Practicesthat Solve Problems/Reduce Risk/Improve Consumer Experience

MODULE 5:

SALESINNOVATION

OPPORTUNITIES

RightMessage

RightProcess

CustomerService

[5 Rules]

[10 Rules, 5-Step Process]

[3 Components]

Module 5 – Effective Home Sales

What is Effective Homes Sales


Why Homes Sales is Broken

• A strong ‘Brand’ is a terrible thing to waste

• Lack of sales agent skills [asking questions, conveying benefits, using experiences]

• Over-promising, and under-delivering

• Obsession with first-cost vs. value

• Inadequate investment in sales training

• Failure to own customers for life


Effective Sales Opportunities

• Build a ‘Brand’

• Invest in Training Sales Agents

• Create Experiences [over 25 in book]

• Hold Sales Agents Accountable

• Customer Education [seminars, tours, manuals]

• Leverage Your New Sales Force; Your Buyers

• Back-up performance with 30-year Warranty

• Complement Warranty with Service Center

• Recognize Value in the Transaction Process

INNOVATIONSTRATEGY

‘Old’ Business Model

Uninformed Customer:

Minimize First CostNAHB estimates for every $1,000 increase

in sales price, nearly 250,000 households fail to qualify for a mortgage on a typical new home.

‘New’ Business Model

The Informed Customer:

Maximize ExperienceWith proven innovations

homebuyers never knew they wanted,but have to have

once they try them.(e.g., make buying a new home compelling again)

“If I had asked my customers what they wanted,

they would have said a faster horse.”

Quote attributed to Henry Ford on the first car he ever built

vs.

Profit

Old Cell Phone Cost i-Phone Cost

Innovation/Value Premium

Profit

Price Based on ‘Value’, NOT Cost

New RevenueWillingness to Pay for

Added ‘Value’

Innovation Business Model

http://www.prlog.org/10722472-see-which-cell-phones-are-rated-as-best-unbiased-reviews.jpg

Right-Sized HomeHard Costs

Healthy Air

Home Performance

Site/Landscaping

Over-Sized HomeHard Costs

Minimum Finish

Design Experts

Customer Service

Healthy Air

Home Performance

Site/Landscaping

Right-Sized HomeHard Costs

Premium Finish

Design Experts

Customer Service

BAU Home Innovation Home

Marketing CostsMarketing Costs

Waste

Waste

Innovation/Value Premium

Profit Profit

Design ExpertsDesign ExpertsHome

Performance

Home PerformanceMinimum Finish

Premium Finish

Healthy Air Healthy Air

Site/LandscapingSite/LandscapingCustomer ServiceCustomer ServiceWaste Waste

Marketing CostsMarketing Costs

Service Center

Over-Sized HomeHard Costs

BAU Home Innovation HomeIncremental CostsCumulative Costs

Applying the Innovation

Business Model to Housing

Same Cost

Higher Profit

New Revenue

The Innovation Home Builder Story

Welcome to the Future of Housing

You can see the beauty of our communities and homes.

Now learn about our innovations.

Innovations that will transform homeownership.

Homes are often the largest purchase of a lifetime…

It’s time to hold them to a higher standard.

Enduring Value


Better Community ExperienceCommunity Spaces

Gathering Spaces

Activity Spaces

Walking Spaces

Quality Features

Quality Details

Natural Comfort

Expert Landscaping

Special Details

Maintained Properties

Architectural Excellence

A Special Place

Special DetailsExteriors That Work Interiors That Work


Better Design Experience

Outdoor Spaces No Clutter System

Rich Trim/Color

Lighting Design

Quality vs. Size

How You Live Floor PlanNatural Comfort

Sense of Community Open Layouts

Lasts BetterLives Better Works Better


Better Performance Experience

Forward-Looking

Minimal Pests/Dust No Moisture Problems Disaster Resistance

Engineered Comfort

Assured Fresh Air SystemChemical-Free Materials Improved Durability

Ultra Low/No Utility Bills

Quality ProcessesQuality Features Quality Technology

Quality Components

Advanced Comfort

Home Automation


Better Quality Experience

Quality Finishes

Advanced Construction Minimal Defects

Minimal Waste

Quality ControlQuality Equipment

Trust ServiceSee the Difference


Better Buying Experience

Quality

Technology

Brand ‘X’

Protection

PITI&E&MBetter Home for Less After-Sale Service

Select Builder

LIfetime Warranty

Expert Sales Agents

Verified Performance

Sam Rashkin