Delight isn’t the first word that typically comes to mind when you speak of the home building process. Experts describe it as perhaps the ‘most stressful experience a family can undergo besides death and marriage.’
Ricky Beauchamp, division president of K. Hovnanian Homes of North Carolina, Inc., explains that his company has made its mission to break this paradigm, and put “joy back into the homebuilding experience.”
K. Hovnanian Homes is a formidable national builder which, in the North Carolina market, has acquired what were formerly known as the builders of Fortis Homes and Westminster Homes, and has created the Four Seasons Active Adult Communities. The builder is one of the largest in the nation and one of the healthiest builders in the state, and recently was designated one of the Forbes 400 ‘Best Big Companies’ for the fourth consecutive year.
Explains Beauchamp (pronounced “bee-chum”), “This company has had a very solid vision since it was started forty-five years ago. Every decision is deliberated upon and calculated to provide the best fit for our customers.”
The First Floor
Begun in 1959 by Kevork Hovnanian, K. Hovnanian Homes has grown exponentially by focusing on the core values it was founded upon. Explains Beauchamp, “We expect nothing less than to be in the top ten percent of all homebuilders with regard to our customers’ satisfaction, the satisfaction of our associates, positive relationships with our business partners and the satisfaction of our shareholders.”
In today’s competitive marketplace, this is no small feat. With ‘homes available’ signs crowding every corner of green space, Beauchamp says customer service is the defining element of success.
“Every builder wants to make a good house, and build it efficiently. But when it comes right down to it, housing is a commodity. You can only buy your materials for so much, and you can only sell your product at a certain margin. There just isn’t a lot you can manipulate with regard to price. What you CAN control is the buyer’s experience, the quality of the workmanship, and being certain you deliver on your promises.”
Beauchamp adds, “We make certain we deliver on-time and on-budget with the end product 100 percent clean, complete and customer ready. Not many builders out there can say that.”
K. Hovnanian Homes is headquartered in Red Bank, New Jersey, and is currently headed up by president and CEO Ara K. Hovnanian. Associates including Beauchamp credit the philosophy and leadership of the founders for the company’s success, “Integrity and mutual respect are the cornerstone for every relationship created in the company. From the homeowner to associates, there is no ‘us or them’ mentality. By eliminating that unnecessary wall that alienates people and hinders a successful venture, everyone involved can work toward a mutual goal – the creation of a beautiful home.”
K. Hovnanian Homes makes it a point to drive this vision home. All employees are ‘associates,’ from the office manager to sales professionals to the company’s executives. It was this mindset that attracted Beauchamp to its ranks.
“I worked as a successful builder and owner of my own company for years, and enjoyed it. But when the opportunity to work with K. Hovnanian Homes presented itself, I jumped on board. I was very impressed with the values and character of the company, and it was a very logical fit.”
While most successful businessmen seem to move from corporate to independent ventures, Beauchamp says he has never been happier. “Now I do what I love to do, which is building homes, but I can do so with the incredible resources, support and leadership of this very reputable organization.”
The Stairway to Success
The resources of K. Hovnanian Homes are considerable. The company builds in over 275 residential communities across 15 states and reports total revenues of $4.2 billion on 14,586 home deliveries in fiscal 2004. Its shareholders are pleased as well. Earnings have grown 76 percent over the past three years and the company has been selected to Fortune magazine’s ‘100 Fastest Growing Companies’ for the past three years.
Beauchamp attributes a lot of the company’s success to the diversity of homes it offers as well as well-placed market strategy. “I, and everyone in the company, believe that everyone should be able to have a home that they are proud of. It is the American dream. We are happy that we provide starter homes, mid-range homes, custom homes and active living communities.”
K. Hovnanian Homes markets homes in North Carolina ranging from $70,000 to $450,000. Homes marketed under the previously acquired Fortis Homes moniker signify the upper-end product with larger square footage and greater detail. After twenty years in this market, Fortis was acquired in 2000 and has been K. Hovnanian Homes’ largest single acquisition. Homes marketed under the previously acquired Westminster Homes name are generally lower priced and geared toward first-time homebuyers.
The company’s developments marketed as Four Seasons Active Adult Communities demonstrate the company’s gravitation toward older-adult living communities. Designed for the aging, and financially-flush baby boomers, the communities offer smaller square footage with enhanced living features, as well as amenities to encourage activity and socialization in a resort-at-home fashion. The development of these communities is very strategic: this market segment it accommodates will reportedly generate 60 percent of household formation in the current decade.
At the beginning of the year, the company merged its marketing of the Fortis and Westminster brands into the K. Hovnanian family, to formally signify its intention to fulfill a wide variety of needs to a diverse marketplace.
Adds Beauchamp, “In addition to the types of homes we build, there has also been careful thought given to the markets K. Hovnanian Homes selects.” Borne in the northeast, K. Hovnanian Homes has thoughtfully expanded from California to Texas, from Florida to Michigan. While much of the company’s growth has in the past been attributable to significant numbers of acquisitions, K. Hovnanian Homes reports that 96 per cent of net earnings in 2004 were organic.
“The housing market in the southeast is growing at an extraordinary rate,” says Beauchamp. “It accounts for about 25 percent of the company’s overall growth at the current time. The Charlotte region is a particularly good market because of its great climate, growth economy, high standard of living, and relatively low cost of living.”
If there is a downside to the region it is most notably the stiff competition. Admittedly, ‘K. Hovnanian Homes’ is quite a mouthful taken alongside competitors, Shea, Weiland, Eastwood and Pulte, but the fight for customers and land doesn’t seem to faze the builder much. “While competition makes my job harder,” says Beauchamp, “I enjoy it to a certain degree, because it pushes us to perform. That means the customer is getting the best value we can offer. That constant challenge is what makes it fun to get up in the morning.”
What makes Beauchamp’s job perhaps a little more fun than most others in his line of work is that K. Hovnanian Homes’ ability to leverage its considerable size in obtaining strategic land position. Its buying power makes it possible to acquire the best land in markets crunched for space.
While K. Hovnanian Homes is well seated in the area for the next several years, there could also be interesting developments on the horizon. “A lot of people are fine with rapid development – if its not in their own backyard,” Beauchamp jokes.
Once housing developments begin to flourish, people get nervous and start talking about moratoriums. “But this can be a good thing,” says Beauchamp. “Regulation makes the market more stable and wards off a dreaded boom. I have to say, I think Charlotte and its leadership have done a good job so far with controlling its development.”
The company tries hard to keep a conservative land philosophy at its core as well, which is appreciated by those concerned about sprawl. K. Hovnanian Homes buys what it needs and then builds on it, as opposed to buying as much as it can, toppling trees and replacing them with empty lots or empty homes.
It appears that ‘good growth’ is a very precarious balance between too much and not enough. Explains Beauchamp, “There are a lot of challenges that determine the health of any market. Schools are a big issue for people looking to relocate, as are roads and transportation. If people stop moving to Charlotte because there are problems with these issues, you’ll see it in the housing industry.”
“And,” he continues, “if you see it in the housing industry, it will be reflected in other parts of the city due to a declining tax base. Now, that having been said, I think the health of the area is very good for the foreseeable future. It’s a very attractive region.”
A Room With a View
K. Hovnanian Homes is a top 5 builder in North Carolina, and can be found throughout the Charlotte region in communities in Matthews, Huntersville, Mt. Holly, Fort Mill and Gastonia. And its presence will continue to grow. According to company projections for fiscal 2005, total revenues are expected to increase by 19 percent.
Also, with over 100,000 lots in its coffers, K. Hovnanian Homes expects its current inventory could last seven years based on 2004 figures. The builder anticipates that it will build on approximately 16,000 of those lots in 2005.
However, it wouldn’t be surprising if the company outperformed those estimates. By virtue of its lot ‘backlog,’ its presence in markets with a strong demand and diminishing availability of space, strong demographics in its markets, solid financial footing and much goodwill from its investors, the future for K. Hovnanian Homes looks pretty rosy. Add to that a healthy mortgage and title service and an unwavering focus on customer satisfaction, and it would seem this picture couldn’t be much brighter.
While K. Hovnanian Homes undertakes periodic studies to stay on top of personal preferences for its design and detail offerings, Beauchamp says that some things are static. “People are very value-oriented. They want the most and best square footage for their money. They desire a well appointed, durable home with curb appeal. It is our mission to deliver these expectations and more. I just feel very blessed that I work with a company that values that as much as the customer.”