The new home business in Orange County today is in what industry insiders euphemistically call a retraction.
That means homes aren't selling like they used to.
There are all kinds of reasons, from price to mortgage rates to consumers' fear of a recession.
But the upshot, for most builders, is that they no longer can simply announce the opening of a sales office and then stand back to avoid the stampede.
That is where Claudia D. Roxburgh--pronounced Roxboro--comes in.
Roxburgh, owner of the Roxburgh Agency in Costa Mesa, is a new home marketing consultant whose client list includes some of the county's biggest and best builders. In its 10th year, the agency has collected dozens of marketing program awards from local, regional and national building and advertising associations.
Before starting her own agency, she worked as marketing director for an Orange County builder. It was a stint, she says, that gave her the insights and credentials to be able to tell builders what they are doing right and, more importantly, what they are doing wrong.
One of the big things they are doing wrong, she said, "is that, if you look at everything that's been built in the last three years, you don't see a lot of innovation. Everybody was pretty much building the same product. It was selling well, so why should they do anything differently?"
But with the current slowdown, builders are re-thinking projects they have on the drawing boards, and that, she says, could lead to a new spurt of innovation.
In a recent interview with Times staff writer John O'Dell, Roxburgh discussed the changes she foresees as builders begin to cope with the new realities of Orange County's tighter housing market.
Q. An observation on the Orange County housing market: There's not a whole lot of innovation and not a lot of differentiation. How do you market a product that looks like everybody else's?
A. Well, what's on the drawing boards now is not what you've been seeing. I think everybody decided we can't look at one more pink house. I'm not making a judgment call about whether the homes have been good or bad, but they were all alike.
Q. They also get intimidating when you put 3,000-square-foot homes on 4,000-square-foot lots and jam them in that tight.
A. But in 10 or 15 years, when the five-gallon tree has grown above the roof line, it will look a whole lot better. Still, the '90s is a new decade and if the '80s was all about the me generation and conspicuous consumerism, then the '90s, in housing, is going to be marked by a return to some traditional things. We're seeing wood siding again on houses, and masonry, different pitches in the roofs, a much more traditional type of design with the elevations in a single development not being so much the same and having more individual character. But the sameness we've had really gets back to being a land-planning issue. When you've got a 4,000-square-foot lot, and you have to have a two-car garage, there is not a whole lot left you can do with the front of the house. In Orange County, where we don't have that much space in most new communities, there's only so much you can do with exteriors. But you're going to see some real changes inside houses.
Q. Why is that? Do tastes in interior layout change all that much?
A. Builders have to focus on interiors because homes are getting smaller. The look for the last 10 years basically has been to have sort of one big room. You walk in the front door and you can see all over the ground level. The problem is that when people live in those houses, there's no place to get away. And now, as people are spending more time at home with their entertainment centers and big-screen TVs and computers, there needs to be a place where somebody can escape and read a book. And so we're seeing changes in how a home is actually designed inside. That's not to say we want little boxy rooms with all kinds of walls that don't need to be there. But we are seeing better use of space.
Q. As a marketing consultant, do you have any input on actual product design?
A. Yes. A lot of our clients will give us a set of plans to go through. That's fun for us because there are lot of people here who have been on the marketing side with the builder and have backgrounds in that area. A typical advertising account executive in the real estate industry doesn't necessarily know how to design houses. But we get very involved with a number of our clients, particularly the smaller clients that don't have quite the level and depth of staff that a large company will.
Q. Basically, you're bringing some marketing skills to the design. You're the 'Gee-this-is-interesting-but- people-don't-want-bare-cellars-anymore' people?
Q. So you suggest the cellar be turned into a furnished entertainment room?
Q. Is part of the sales slump a reaction to that lack of innovation? People getting tired of the same old product?
A. I think there's certainly a degree of that.
Q. So what changes will the industry be amazing us with over the next few years?
A. What we've basically started to see are exterior changes. Different sidings and window treatments, more definition in roof lines, which actually is really important in the big condo buildings. It helps make the building look interesting. Inside, however, as spaces have been getting smaller again, there has not been a great deal of new product in terms of what you can put in houses. And I think that's going to be changing. Take the appliance package. It hasn't changed much in the last 30 years. That's because the new items are very unique and you can only put them in very expensive houses. But now you're seeing companies come out with much more cost-conscious versions.
Q. So they'll be at Sears next year.
A. Exactly. A lot of those kinds of companies, like plumbing fixtures and appliance makers, tend to be a bit remiss in reacting to what's new in the marketplace from an architectural standpoint, which is why some things have spent 10 years as a luxury product before becoming standard. But that is changing now.
Q. A lot of people in Orange County are house-poor. They have nice homes, but they can't afford to make house payments and go out on Friday evenings, or take vacation. Is there a lot going on with amenities now?
A. Well, we've seen more being done with back yard or indoor amenities such as small swimming pools and spas.
Q. How about other entertainment items? Are we coming to the day when homes will be sold not only with spaces for TVs and stereos, but also with TVS, VCRs, stereos and computers already built in?
A. There are a number of companies that are going very strongly after the new home market. If a (manufacturer) can sell a builder on putting your television in every home, that's a lot of TVs. I know that the people who make Bose speakers were going very strongly after the new home market for that exact reason. If the builder prewires and puts Bose speakers in the family room and master bedroom and wherever, then you're selling a lot of speakers. I think you're going to see a lot more of that because people are going to have to stay home more because mortgages take up so much of their incomes.
Q. A lot of peer and political pressure has gone into driving up the cost of the house here and elsewhere. People want class and flash and high-value properties next door so they don't feel that their property values are being lowered.
A. I understand the theory behind that. They require developers to put in front yard landscaping, for instance, because maybe the buyer wouldn't have the cash to landscape the front for a year or so and having all the yards done at once makes the project look better. But it does contribute to the cost.
Q. It is clear that the 20-year-old couple with a baby on the way is not part of the new home market in Orange County. So who are homes targeted at?
A. Well, a lot of single people; for example, divorced people setting up new households. Also couples without children. People who do have the three and four kids are probably, unless they have incredibly high incomes, going to have to live in other areas.
Q. So you are dealing with a more sophisticated buyer, one who probably is buying a second or third house. How should builders market to that particular group?
A. One thing to remember is that the buyer is absolutely inundated with information--mail, newspapers, magazines. There is so much you can't possibly keep up. So I think it really becomes our responsibility as marketing people to come up with new and interesting ways of getting the attention of that buyer. For the last 25 or 30 years, the way we have done this is to place an ad in the real estate section on Saturday or Sunday. But we're going to have to do a lot more than that in the future. Direct mail is something that we have been utilizing in Orange County very successfully.
Q. Direct mail to targeted groups?
A. Oh, you can get incredibly targeted. We have a pretty good concept of who the buyers are going to be before we ever open a project. We normally utilize direct mail after we have had considerable traffic through the sales office so that we can analyze the shoppers and particularly the buyers. If it's a project in South Orange County and most of our buyers have come from Costa Mesa and Irvine, then obviously we're going to direct the program to those cities. And then we target to income and marital status and any number of other characteristics. The location within the county has a lot to do with it. You market a project in Laguna Niguel very differently than you market a project in Mission Viejo. It's a very different buyer.
A. In Mission Viejo you get a much more family-oriented buyer than in Laguna Niguel. Mission Viejo Co. has done a fabulous job for 25 or 30 years of creating a community image, so you hitchhike on that. In Laguna Niguel, you might give more weight to the builder. And then it's further defined by the product itself: how the bedrooms are arranged, what sort of a family is most likely to live there.
Q. If you had a J.M. Peters project and a William Lyon project next to each other, would you market them differently?
A. Very different. The buyer that's going to buy a Peters house is, in most cases, a much more sophisticated buyer than is going to buy a William Lyon house. That's by design. It has to do with the specs of the house, the floor plans, the way everything is arranged.
Q. When you say the specs, are you referring to specifications for amenities?
AIt refers to the price and quality level of light fixtures and plumbing fixtures, and cabinets and other trim. But even if the two developments were at that same price, Peters would do something that's more contemporary. And William Lyon would do something that's more traditional. That's just simply the way they are. In advertising the Peters product, you would probably have a couple without children in the ad. You would probably have a family in the William Lyon ad.
Q. It seems that price doesn't get much play in home ads these days.
A. The only time that we really hit hard on price is if there are 20 projects for sale and we're the lowest priced or among the lowest priced. But if you're pretty much in the same price range with everyone else, it's not really a selling point. You're not selling price.
Q. What are you selling then?
A. You look closely at your client's homes and at the competitors' homes, and you identify the strong part of your client's product. You know that they're all about the same square footage and about the same price range, but maybe one of your models has a great living room or a really sexy master suite. So you go to the product and attempt to find something that is different from the competition. And if that is virtually impossible, you may try an ad that doesn't even show the product but talks about lifestyle and things of that nature.
Q. Is there much of that kind of advertising in today's home market?
A. Well, there's a lot of sameness.
Q. And is that because developers fear being different or simply because of the cost constraints?
A. I think it's a little of both. Developers don't like to be too different because, until now, everything's been selling. So the attitude is that if it's not broken, don't fix it. And basically, the builders all pay about the same for the ground; they all have to put basically the same product on it; they pay the same for the infrastructure. If you look around, you find there are very few communities with much market segmentation. They sell all of this land to all these builders, at basically the same price, and then the builders all have to build basically the same house in order to make it economically feasible. Whereas when the Irvine Co. or Rancho Santa Margarita goes and does a village, they say, 'Okay, Jim Peters, you're going to build homes between this size and this size, and you're gonna sell 'em here, and you, Barratt, you're gonna do this, and Taylor Woodrow, you're gonna do this.' They take that approach so they get a product mix that works and so builder A isn't beating builder B to death because they're both doing the same thing.
Q. Do people shop developers, or developments?
A. They shop developers and they shop product.
Q. So there really is a recognition that this is a Barratt home or a Lyon or a Kaufman and Broad?
A. There's no question about it. And I think those builders that have a very strong corporate image will find that it helps them through tough times. The buyer knows these names and the level of quality they are connected with.
Q. So how do you market a new builder? If I hired you to start marketing my $450,000 two-story, tile-roofed pink Mediterranean-style homes, what would you do to move an O'Dell home?
A. Change the name.