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The Ongoing Impact of Cheap Oil: a Q&A with Trendmaker Homes’ Will Holder

Will Holder

Will Holder

HOUSTON – Will Holder has spent some four decades in the home construction business, the last 22 years at Trendmaker Homes, where he is currently president.

The 2012 president of the Greater Houston Builders Association, Will recently developed and taught a graduate level real estate course in The University of Houston’s Bauer College of Business, Graduate Real Estate Program.

Trendmaker Homes, founded in 1971, was sold last year by Weyerhaeuser Real Estate Co. to Tri Pointe Group. Will said the home market has slowed somewhat due to low energy prices, but Houston’s diversity should keep it from hitting desperate times.

Will Holder discussed the housing situation with Dale King, a contributing writer for the Realty News Report. Some of his comments follow:

Realty News Report: With the decline in the energy industry, how was 2015 for the Houston home building market?

Holder: Independent reports said home sales were down 15 percent. That’s pretty accurate, from what we are experiencing and what our competitors say. I read something the other day that said one of five jobs created since the recession was in the oil business. To me, that means four out of five were not in the oil industry. You see the Port of Houston, with the most tonnage in America; the health care industry, medical centers and suburban hospital construction. The oil industry is clearly going through a reset, but it doesn’t affect all sectors. They are going to do what they can to get profitable or break even.

Realty News Report: What’s ahead for the Houston home building market in 2016?

Holder: We have to look and see what’s coming. A total of 31,300 lots are being developed right now for homes. It takes about 18 months to deliver a development, so we have a year’s worth of ‘food in our pantry.’ I don’t consider that a surplus scenario. I’m not losing sleep over structural problems. The market ebbs and flows. I’ve been building houses for more than 35 years, I’ve seen the market go up and go down. A year ago, we couldn’t predict what the price of oil would be now, and we can’t predict where it will be a year from now. In 2016, I think the market will continue to be slow.

Realty News Report: What about the starter home market? Is there much being built for first-time home buyers?

Holder: The expectations of buyers have changed. It’s the way young people are with iPhones. The people who have an iPhone 5 want to get an iPhone 6. First-time home buyers who are budget-minded are purchasing existing homes. But some aren’t satisfied with that, they want new homes with all the amenities. It’s a millennial thing, I guess. Some of my friends’ kids are buying brand-new, beautiful homes.

Realty News Report: You have an interesting take on competition. Can you share that with us?

Holder: I have said that our biggest competition comes from five-year-old Trendmaker homes. There is a lot of evolution in the field. We have to replace a third of our floor plans every year to stay up to date with what people want. I just got back from touring a new development and I saw a lot of brand new plans. We are constantly looking at what other companies are doing. We look at what is selling and what is not. We used to offer a second suite on the first level of our homes as an option. Today, we can’t sell a house without a second suite on the lower level. To do that, we have to do away with the formal dining room. Many people don’t want formal dining rooms any more, they want to eat in the breakfast area. Also, it costs more to build a house today than it did five years ago.

Realty News Report: Trendmaker just entered the Austin market. Can you explain why?

Holder: We looked at the Austin-San Antonio corridor in 2007 and were planning to go in gung ho. But the market spiraled downward and we put off the plans. Our new ownership situation also delayed any big changes. (Tri Pointe Group purchased Trendmaker Homes from Weyerhaeuser in 2014). We have just started our first house in Austin. There was been tremendous job growth there. Ultimately, Tri Pointe wants to build single-family homes on 38 lots in the San Saba neighborhood of Belterra. The company is also acquiring lots at a second location.

Realty News Report: How has the change in ownership of Trendmaker Homes from Weyerhaeuser to Tri Pointe Group changed your company?

Holder: Weyerhaeuser is a large paper company, and they have a certain paradigm. Now, we are with Tri Pointe Group, a company in California that is made up solely of builders. That is the best thing about them, they are not accountants, not Wall Street financiers, they are home builders. Weyerhaeuser managed us like a portfolio. Tri Pointe manages us like a builder. I like it a lot. Their point of view is closer to home for us. But we loved Weyerhaeuser, they created a real home for me and I was proud to work with them for 22 years.

Realty News Report: You recently told an audience at a conference that you prefer to sell homes during a recession. What do you mean by that?

Holder: Not long ago, the Houston market was so hot, it got frothy. It’s sort of tough to operate in that environment. Everyone’s afraid you’re going to leave a dollar on the table. When the market is in balance, then people want to go in. I was being a little sarcastic (laughs) when I said I’d rather sell during a recession. I don’t mind selling homes when the market is frothy.

Realty News Report: You recently started a graduate-level real estate course in the University of Houston’s Graduate Real Estate Program. Can you tell us about it?

Holder: When I got into this business, it wasn’t a discipline in and of itself. It has evolved a lot; it’s become more sophisticated. By that, I mean more complicated. It takes more sophistication to operate in it comfortably. We need people who see it as a discipline, who are students of home building or students of real estate. These people will be welcomed into the business with open arms. I really love what I am doing at U of H, I love teaching the classes and I love helping students get jobs. I think it will be a great career for them. And we need them.

Realty News Report is a Texas-based publication edited by Ralph Bivins.

Dec. 13, 2015

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