Sonoma County needs high-end housing beyond the wildfire reconstruction, says Christopherson Builders

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Keith Christopherson was a stalwart of North Bay homebuilding, building thousands of homes over nearly three decades until the Great Recession, and now he’s applying his big-project prowess toward the big wildfire rebuild in Sonoma County.

He started as a carpenter’s apprentice in the 1970s, then he and his wife, Brenda, started Christopherson Construction, later Christopherson Homes. They relaunched in home development as Synergy Group with son Andy and other partners a few years ago. Just after the October 2017 wildfires destroyed over 5,000 Sonoma County homes, they went out on their own as Christopherson Builders.

Focused on rebuilds and speculative homes on burned lots, they are working on projects for over 100 families. Five homes have been completed, and nearly 40 are under construction. The target pace is 1.5 home completions a week.

Ahead of his participation in the Business Journal's May 29 Building the North Bay conference, Keith Christopherson talked with the Business Journal about homebuilding now versus during the big-subdivision days before the Great Recession and about what lies beyond the rebuild.

How has insurance-fueled rebuilding changed local homebuilding?

It’s a totally different animal. We were subdivision builders. We built everything from first-time buyer to million-dollar-plus homes. Here, every home is a little bit different. Every home is on a different type of a lot. Every home is a custom home in many ways, regardless of where and what you’re building, from the moderate end to the high end.

So it’s a much higher overhead business. There’s a lot more day-to-day management than there was back when we were building large subdivisions.

You talked about young people getting ready for jobs in the trades. What have you found at the construction management level, now that you have higher demand for this day-to-day management of projects?

We don't have a lot of people for those positions. You're really trying to take your own people, and you're trying to train people up. It's a challenge; I won't lie.

With the construction management side, we've been lucky, because we bought back quite a few key people from back in the Christopherson Homes days. We just gotten great people with great aptitude and a lot of energy and, and desire to really get this done and make it happen.

We spend an inordinate amount of time working on processes in our company, and this is paying dividends, since we are in a business that's really quite a bit different from what we were accustomed to in the past. Not for the weak of heart.

When you're talking about putting systems in place, is that also how you explain the rebuild process to your clients?

Absolutely; that's a big piece of it. In the beginning, we were trying to do the best, but we didn't have the systems and the structure to back it up. We've been working with for the last year to try to smooth the road for ourselves, the customers and for our trades that are on the job.

The objective is to deliver a great home at a competitive price, in a timely manner. That's really the three legs of the stool: time, quality, and price. There's a balance to be achieved between all of those disciplines.

What challenges have you encountered in balancing quality, timeliness and pricing?

In the beginning, there were trade (subcontractor) problems. We’ve been working through that, and we’re trying to get ourselves down to a couple of really good trades in every area. We’re only as good as the people that are working with us. If you've got a turtle in front of a rabbit, the rabbit is going to be sitting there at the starting line and waiting to go. They can't do what they got to do until the turtle gets there. It's really a growing process.

The first thing you want to do is focus on quality; that's No. 1. We want to deliver a good experience to our customers. Our customers have been through hell, and we want to give them confidence that we are there for them. We're going to be there for them, and we're going to we're going to take care of we're going to get their home done and not put a lot of pressure on them.

We've done our best there. At times, we haven't had the results we wanted. But when we didn't get the results we wanted, we learned from it. We've modified our practices.

Then you work on the price, to keep the price where it's where its market rate, where it's comparable. You don't want to be the least expensive, because when something is too good to be true, it usually isn't. And you don't want to be the most expensive.

Then the last thing is the time. We think our quality is where we want it. We think our prices are pretty close to where they need to be. We're looking at time in every aspect of our business right now.

What are rebuild costs now?

In general, prices are probably $310–$350 a (square) foot, depending what somebody wants. It's not one size fits all. You go into the shoe store, and you're going to find one pair of shoes for $20 and you're gonna buy another pair for $200. It really depends on the design of the home, the geological conditions, what a person wants to put in the home, and all those things play together.

Our numbers are usually a little bit higher, but we don’t shortcut stuff. We do things to make things last, and we want to do a good job. And so we spend a little bit more (and) put other steps into our construction process that most others don’t. Many times, it’s something that the buyer or a customer wouldn’t notice, but we notice it.

Is there an example of a system here that needs to be in place and isn't carried through elsewhere?

One of the things that we discovered is when you paint on the inside of your house, and you're going right over the drywall, the drywall is paper-backed. Wherever seams are, there's a taping mud on it that hardens up. The paper pulls the paint into it. The mud holds the paint on top of it. So when (the wall gets) into the late afternoon or early morning sun and you look across the ceiling or along a wall, you see stripes.

That's a little thing, but we spend a couple of thousand dollars extra on every house having that dealt with. In some cases, we put a putty coat on the drywall. And in some cases, we have a real heavy primer put on that to seal it all off, so you don't get that effect. And that's something that costs more, but it's just something that we do, because we think it's the right way to do it.

What is the construction outlook?

When it comes to that, I’m a pessimist, and I’m not an optimist.

Santa Rosa and the county, they’re doing a great job of trying to smooth the path and make things flow easier from beginning to end on the entitlement and the building process. However, we have the (protected species) California tiger salamander and rare flowers that are impacting the areas where most housing would go. We’re putting a lot of effort into downtown housing. I think there’s a market for it, but it’s going to be expensive housing to build, and there’s a limited market for it.

(Experts) were talking four years ago about the death of the suburbs, and everything is going to be downtown. Now they're coming back and finding out with the millennials this is not what's happening. Now millennials are out in the suburbs. This group of people is starting their families, and that's what they're looking for.

There’s a disconnect between the bulk of the market and what it needs, and what is going to be available in the future. It’s a big deal, because it affects how we attract jobs. Our housing cost is staggering. We're not getting enough new units on the ground to really generate and foster a healthy building community.

I put a thumbs down on my expectations, but I would put a thumbs up for the effort that’s going into it.

Things that I'm seeing done by the the municipalities and the county are just extraordinary. I'm so proud of my hometown for the work that they're doing. There's just things that we have that are curtailing our ability to get out and produce housing for the middle market. They're too big of issues to overcome at this point, but those need to be addressed and challenged and resolved before we have a healthy housing market here.

What are opportunities beyond the rebuild?

There’s going to be a robust remodeling market. There’ll be a market for luxury homes. For the middle-upper- and higher-end homes, we have very few. If you’re going to try to attract business to the area, you got to have housing for these folks. Most of what was available burned down.

We’re worried about the low end, but we need to worry about that upper end too, because these are people that are going to be the job creators for other folks. There’s going to be a market for that for the next several years.

We've done multifamily in the past, but it requires zoned land at a price that works. For private builders, there's still a hangover from the recession with financing. It used to be, we could go down to the corner and get a construction loan and build something, but that's not the case any longer. A lot of the banks aren't doing for-sale construction loans. Some are, but there's a lot that aren't. Financing is the mother's milk of the whole thing.

What that does is it makes it tough for building companies to pick up a 40- (to) 50-lot deal and build it out. Then the mortgage rates have really held, even though they're over 4% right now. They're still at historic lows. I don't think any of us ever felt we'd ever see mortgage rates like that.

There’s going to continue to be a market for apartments, especially here, because for-sale housing is so high, and there’s so little being produced and will be produced.

I may sneak a small subdivision in here or there, or some town houses for sale town houses.

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