There are stories behind every community member, program and insight we uncover, and here is where you’ll find them. Read on to learn more about how we think, what we’re up to and what drives us.
PRODUCT: Audrey Lam, Oakwood Homes
Over the next 5 years, the opportunity to provide new, attainable housing for middle income households is about 1 million homes per year. Together, we can make a difference.
How can we think differently and provide housing solutions for the missing middle? We recently discussed this with our community via think tanks and presentations at the 2019 live round table event in Denver. Audrey Lam, CFO, Oakwood Homes, spoke to the topic of Product, you can find her slide deck here.
HERE ARE AUDREY'S INSIGHTS ON PRODUCT: households; home size, design + livability; customer relationships + financing
Oakwood Homes, says CFO Audrey Lam, has for years focused on first-time homebuyers for its core business. “There is something special about building a home that’s going to be someone’s first home,” she says.
The company’s latest product is American Dream being built on the east side of Denver near the airport in the Green Valley Ranch master planned community. Part of what makes this product particularly special is its price. In a market where the median home price is $424,300, Oakwood is selling American Dream in the mid-$200,000 range.
The How + Why
“Our goal is to make housing more affordable and also be profitable,” Audrey says. Oakwood was purchased by Clayton Homes in July 2017, and Clayton is owned by Berkshire Hathaway, a publicly traded company. Ultimately, Oakwood has shareholders to answer to.
How are they keeping costs down? Certainly, being owned by Clayton helps. It’s the largest builder of manufactured housing and modular homes in the United States, and Oakwood benefits from volume discounts. But more important is that Oakwood, typically a conventional builder, has embraced vertical integration and panelization.
Oakwood’s panel plant, Precision Building Systems, builds wall panels, roof trusses and floor systems. “Then everything is delivered to the site and framers put it together,” Audrey says. She points out that off-site manufacturing reduces labor on site, reduces waste and creates a higher quality product because it’s made in a factory-controlled environment. “There is no pile of lumber on site getting damaged while waiting for a crew.”
With American Dream, Oakwood also keeps costs low by purchasing and developing its own land typically in large long-term MPCs. “We primarily build in large master planned communities, where we can leverage our overhead by selling multiple products in a small geographic area,” she says. And, with the American Dream home, there’s a shared driveway concept that allows for more density. “Our design and land planning groups have figured out ways to get high density without the neighborhood looking cookie cutter.”
Audrey calls the American Dream design a “cluster product,” a six-pack of homes with their back doors facing each other. Between the houses is a shared driveway, which makes the layout feel a bit like a cul de sac. “It makes the neighborhood comfortable and aesthetically pleasing,” she says. “It doesn’t cost more to make a neighborhood feel good.”
Inside, the two- to three-story, two- to three-bedroom homes, ranging from 1,000 to 1,700 square feet, live larger with lots of windows. And many have a second story walk-out balcony for a roomier feel.
Lam says that in the future Oakwood hopes to “blur the lines between manufactured homes and site-built homes. We hope to one day build a whole structure in our facility and put it on site. This will really allow us to push the cost down, and in turn deliver an even more affordable home.”
Oakwood sold and closed its first American Dream community of 24 homes in 2018. So far in 2019 the company has sold 60, and closings will begin in the Spring of 2020. In Denver in 2020, Oakwood will close 90 American Dream homes, which will be about 11% of its Denver market’s closings.