Castle Creek Homes South makes the homebuying process as affordable and efficient as possible.
CASTLE CREEK HOMES understands that buying a home can be a daunting task, especially in a state like Utah where the average salary isn’t the highest. With interest rates low, however, potential homebuyers are willing to roll the dice to get into the property ownership ladder, and Castle Creek Homes aims to give them the most house for their money.
“With pricing as high as it is in our market, what’s really keeping us going is low interest rates,” says Sam Drown, president of Castle Creek Homes South. “I think our innovation is all about allowing a buyer to fully customize a house without breaking their budget.”
Castle Creek Homes has two divisions. Drown is a partial owner of Castle Creek Homes South, which focuses on Salt Lake County and Utah counties, Utah.
The company buys land, develops lots, sells and builds production and full-custom homes.
“What makes us a little bit unique is we allow people – even in a production-type neighborhood – to fully customize a house,” Drown says. “We provide some process efficiency to custom homebuilding by building a custom home for a production price.”
The northern division of the company was founded about 20 years ago by Mike Schultz and has been building homes primarily in Davis and Weber counties in Utah. Castle Creek Homes was named the 2010 Builder of the Year by the Northern Wasatch Homebuilders Association.
Drown’s career includes stints with two large production builders before starting Castle Creek Homes South. The former employers are among the industry leaders in efficient and cost effective homebuilding, but they used fairly complex systems in place for their operations, which proved to be quite limiting for homebuyers.
“Complex operational systems are great for efficiently building the same home plans over-and-over again with limited options, but don’t allow for great flexibility in customization,” Drown says.
This is where Drown sees an opportunity. With simplified operational systems, Castle Creek is able to be flexible and efficiently customize its product.
Instead of forcing clients to use a massive database system to choose the options for their new home, Castle Creek Homes gives them a one-page design selection sheet for buyer options. The designer fills in this sheet with notes from the buyers, and subcontractors use the form as a purchase order.
“Rather than have a big database that limits what can be done, we go in the opposite direction,” Drown says. “Everything is on one page, and we price out as it comes out.”
In order to make this business model work, Castle Creek Homes maintains strong relationships with its subcontractors.
“In order to do what we do, we rely heavily on our trade partners,” Drown says. “Our model would fall apart in a hurry if without quality subs and with high turnover.”
Castle Creek looks for service and price as the top two factors when choosing subcontractors, and Drown says those should not be mutually exclusive.
“We’re very picky up front about the subcontractors we use,” Drown says. “We bid our work regularly to ensure we are receiving competitive pricing from our subs and suppliers.
“In the event a bid from qualified competitor comes in lower, Castle Creek gives its current sub the opportunity to match pricing,” Drown adds.
Keeping Product Affordable
With home prices surging in the Utah market while wages remain low for potential buyers, Castle Creek Homes South is looking for homes in older neighborhoods that the company can remodel and sell to first time home buyers.
“We need to offer homes at a lower price point that people can afford,” Drown says. “This is business plan we have just started to implement.”
The north division of Castle Creek Homes also builds apartments, which is a hot trend in Utah because of the affordability issue. The south division is beginning to target townhouse for lower-priced product, as well, according to Drown.
“We would like to be diversified in the market by building apartments, townhomes, and single family detached and full customs,” Drown says. “I see us being heavy in all areas.”
Drown also says the south division of Castle Creek Homes would like to build about 180 homes a year in Salt Lake and Utah counties, and he expects to reach that milestone in about three years.
In 2015, the division is expected to have 70 closings after 45 in 2014 and 39 in 2013, according to Drown.
“We’re building our inventory slowly, but wisely,” Drown says. “We don’t want grow just for the sake of growing. That’s our ultimate goal, but we want to be profitable on the way there.”