Single-Family Housing Market Panel: Building contractors share their insights - May 2019

By Beth Miller

Three of the country’s top flooring contractors to the single-family builder market spoke with Floor Focus concerning the labor shortage, the use of hard surface versus soft, how builders are marketing to today’s homebuyer and what products they are offering beyond flooring. The contractor panel includes Germaine Castro, director of corporate procurement, with Residential Design Services, headquartered in Anaheim, California; Francis Maasland, corporate director of purchasing with Primera, located in Phoenix, Arizona; and Doug Davis, vice president of sales with Artisan Design Group, headquartered in Southlake, Texas.

Q: If household formations are still strong, why isn’t the housing market keeping up?
Castro: Demand is still consistent, but labor costs and labor shortages impact the builder’s ability to meet the demand.

Maasland: In Arizona, we have ample land supply and lending seems accessible even for first-time homebuyers. Our biggest challenge is labor.

Q: How do the homes built today vary from prior years when it comes to floorplan and square footage?
Castro: The homes are smaller with more multifamily and vertical floorplans.

Davis: We are seeing a continuation of open floorplans in the main living areas (kitchen, living room, etc.).

Maasland: Floorplans remain fairly similar; builders repeat the plans that have sold well historically. However, we do see an uptick in townhomes and condos.

Q: What are the demographics of today’s buyer? Can first-time buyers afford a new home?
Davis: We are seeing most of the major national builders cater toward the first-time homebuyer, with a brand of homes for this buyer. DR Horton’s Express Homes, Lennar’s E/I, Meritage’s Live Now, NVR’s Simply Ryan and Ashton Woods’ Starlight are some examples the brands major builders are pushing in this segment. These brands not only speak to affordability but also typically offer the homebuyer an easier and less stressful buying experience.

Maasland: From entry-level to high-end buyers, it’s a mixed demographic here in Phoenix.

Q: Where does carpet stand today in the eyes of the builder?
Castro: Builders are purchasing hard surface products for the main living areas. They are investing in hard surface and dedicating less of a budget for carpet in their overall flooring selection. Carpet still tends to be selected in bedrooms, with the low-pile textured loops remaining popular. Some buyers are opting for hard surface products in bedrooms.

Davis: We seem to always talk about hard surface in single-family, as product continues to innovate. As it relates to carpet in single-family over the last three years, our percentage of carpet installed annually has only decreased slightly as an overall company. It remains a little less than a third of the flooring space, typically in bedrooms, living and office space, and upstairs living.

Maasland: Carpet is being reduced to mainly bedrooms only. Buyers are increasingly turning to hard surfaces.

Q: When it comes to hard surface flooring, how does a builder decide if they want to offer real floors or look-alike products? Does the consumer get a say? What flooring is most popular and why?
Davis: We are seeing the builder (due to consumer feedback) seeking floors that are the most durable and easiest to maintain. We have all seen the incredible technology that manufacturers/suppliers are bringing to market in LVT and laminate; the realism and visuals for the price points are incredible.

Castro: The most popular trend is still LVP/SPC. Wood remains a strong category for us, but we saw a big increase in LVP sales in 2018 over 2017. I think the reason for the trend is the cost, functionality of the product and the look. It’s also a well-marketed flooring category.

Maasland: Our account managers present the base packages to the builder or the builder specs out the product specifically. Tile is still the dominant floorcovering in Phoenix. The most important factors are durability and easy to maintain products at a reasonable cost. We have a steady increase in wood-look plank tile sales. There is less maintenance than real wood flooring.

Q: Where is tile/stone being used in new homes today? Is that business growing or shrinking?
Davis: The tile market is definitely under attack from other products in the industry, namely LVT, as it relates to floor space. Due to the ability to coordinate floor and wall visuals, tile is still very strong in wall installations, bathroom surrounds and similar areas, which is making it more difficult for other products to take floor space in bathrooms and kitchens. Tile installation has become the biggest area of focus for us. If the rumors of tile manufacturers coming to market with innovative, easier and less labor-intensive tile installation methods are true, this will help keep the category growing.

Castro: Our tile sales are close to the same as the year before, regarding quantity installed.

Maasland: We are seeing tile everywhere, with the exception of the bedroom, due to durability and the low cost of maintenance.

Q: Is waterproof flooring an important selling point in the builder market?
Castro: Waterproof flooring is an important selling point for the buyer. Builders like being able to install the floor in every room, including laundry rooms and baths. It’s less expensive and the graphics are so realistic with some brands. Waterproof flooring is quickly becoming our most-asked-about product category.

Maasland: Our builder clients have not specified waterproof flooring, though we are starting to see interest. It hasn’t hit our builder market yet.

Davis: No question that consumers are hearing about waterproof floors and asking for them. Ease of maintenance is what they are truly after. If spills or accidents happen, they want to know that they will be able to clean that area with no issues.

Q: Tell us whether usage of these flooring categories is trending and why: carpet, laminate, LVT, hardwood, tile/stone.
Davis: Carpet is slightly down. Hard surface is expanding into living areas and bedrooms. Laminate is slightly up due to the significant enhancements in visuals, continued durability and ease of maintenance. LVT is up-the hottest talked-about product in the industry as it relates to enhanced visuals. The move to rigid LVT in single-family has been a huge gain because of the product being able to handle more environmental elements throughout the build cycle.

Maasland: Carpet is being reduced overall. Tile sales are increasing. Tile and laminate sales are not very high due to cost. We have a few builders that recently added LVT into their programs.

Castro: We are seeing a slight increase in carpet and a slight decrease in tile. There is no change in wood; it is still a good seller for us. LVT is showing a big increase. Laminate and stone are down.

Q: What is the status on the availability of quality labor? Do you have any ideas concerning a remedy to the labor shortage?
Castro: There is not enough quality labor to meet the demand. The industry is making efforts to recruit and develop builder-sponsored training programs. The training programs are working, but it is a slow process. Offering competitive compensation, including health and welfare, is key in retaining our existing labor.

Maasland: We have quality labor due to our successful working relationships. Many installers are retiring, creating openings and taking their skills with them. With this in mind, we need to start an apprentice program to teach new installers the correct installation methods from the professionals.

Q: Please describe what you anticipate the homebuying market to look like by the end of 2019 and into 2020?
Castro: We’re seeing more vertical product, including elevators, to meet the demand of Boomers. Technology is important and is driving builders to offer connected homes as the standard to buyers.

Maasland: We will most likely see an increase in townhomes/condos (attached and multi-level homes). Plan sizes remain fairly similar.

Davis: We see and anticipate that the homebuilding market will be flat to slightly up, which sets us up to stay consistent and manage the growth.

Q: Are flooring contractors expanding the mix of services or products they offer their builder customers beyond flooring?
Maasland: Yes, Primera sells flooring, countertops, cabinets and window coverings, and provides design center services to builder clients. Builders want a one-stop shop-the ease of scheduling multiple products with one company.

Castro: Yes, we continue to add new products to our offering. Our customers depend on us to look for ways to add value. Most recently we successfully added cabinets to our scope of products.

Davis: Yes! We want to take as many of the interior finish products to the builder as we can. We see this as a huge advantage in making us more important to the builder by taking care of their biggest headaches. We are big in the design process and this fits into our model perfectly.

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