Cathie Anderson

California building industry leader: Home construction making steady comeback

The housing industry collapse seasoned Joe Killinger, the new board chair of the North State Building Industry Association, and other building industry executives. Those difficult times continue to shape the way they are doing business amid the rebound. KB Homes offers built-to-order homes.
The housing industry collapse seasoned Joe Killinger, the new board chair of the North State Building Industry Association, and other building industry executives. Those difficult times continue to shape the way they are doing business amid the rebound. KB Homes offers built-to-order homes.

The homebuilding business lured 41-year-old Joseph Killinger from a good job with defense contractor Raytheon about 18 years ago, but he is painfully aware that it doesn’t hold quite the same appeal after the sharp, sudden and prolonged job losses during the Great Recession.

“In some ways, I think our industry is still paying for the housing downturn,” said Killinger, the new board chair for the North State Building Industry Association. “We lost credibility with potential people who wanted to join our industry, and we lost talented individuals through the downturn who were let go and went to different paths in life.”

In his day job, Killinger leads the Central California division of KB Home, an area that reaches from Sacramento down to Fresno. He’s looking to hire several salespeople, he said, but since the downturn, people are hesitant about choosing a career in the homebuilding industry.

He wants to get the word out that people can find jobs as salespeople, warranty representatives, superintendents and trade apprentices. It’s still an industry, he said, where workers can earn good wages without a college degree.

Killinger started working in the industry when he was 14, tarring basements for his uncle’s custom homebuilding business. Before his first day of work, he thought it might be an improvement over working on another uncle’s dairy farm.

“I remember I had been in this one house for like five hours,” he said. “In Wisconsin in the middle of July, you have humidity, bugs and everything you can think of. I remember thinking, ‘I don’t know. Would I rather be in the haymow right now stacking hay, or would I rather be doing this?’ 

He stuck with the work because it paid well, but after high school, he said, he followed the example of many of his relatives who had joined the military and subsequently built successful careers. After serving in the U.S. Marine Corps, he said, he got a job as a quality assurance manager at Raytheon in Irvine and thought he might make a career of working with defense contractors.

Then the company decided to move its plant to Chula Vista, and Killinger knew he didn’t want to relocate there.

“My wife and I had just bought a home from a builder called Forecast Homes, and we were living in Oceanside,” Killinger said, “and ... I remember walking to the mailbox, and I flagged down the company’s superintendent to ask him some questions about our house.”

The two men got to talking about homebuilding, and the superintendent was impressed with Killinger’s knowledge. He suggested that he go talk to the division president about a job the next day. Killinger went on the interview and landed a job as the warranty representative for his housing community. He ended up having to make the repairs on his own house.

“With my background in homebuilding, I was actually able to fix a lot of the stuff without calling the trades (people) back in,” Killinger said. “I could do drywall repairs. Painting’s easy. I could do electrical fixes. I could do a bunch of repairs, which caused our work orders in that community to drop so dramatically that it was noticed.”

The division president pulled Killinger into his office one day and asked: “What are you doing? You’ve got the fastest repair time in the company.” The young veteran explained what he was doing and got a promotion to assistant superintendent. Eighteen months later, he stepped up another rung on the ladder, becoming the superintendent in charge of building a large community in Oceanside.

Once that project was complete, the division president asked him what he ultimately wanted to do for the company. Killinger told him that he’d like to have his job one day, but he knew he had more to learn before he could do it. The division president put him into a training program, and Killinger rotated through purchasing and project management.

Before he could become a division president, K. Hovnanian announced in December 2001 that it would acquire Forecast Homes. If Killinger wanted to become a division president with the new company, he would have to get his real estate license and serve as a community manager. He did both and ultimately became a division president in 2007, just as the first effects of the housing crisis began.

“At the beginning of the downturn, people had real doubt about whether it would last,” Killinger said. “No one wanted to believe it was happening. Then, it was six months to a year after it hit that management realized they really needed to make changes. ... Picture a homebuilder as a large ship at sea, and when it’s up to speed, it’s moving, and when you’ve got to stop it or make course corrections, it takes time to do that.”

Many homebuilders opted to scale down the size of the homes and yards they were offering because most buyers no longer could afford the 3,800-square-foot home. Even now in Sacramento, Killinger said, the best-selling neighborhoods are those where homes are priced below $400,000.

“The buyers are willing to compromise on the yard size to get the house. That’s what they want,” Killinger said. “Then you pair that with a 3 7/8 interest rate or a 4 1/8 , and they’re like, ‘You know what? I’m going to get into this house, even though I don’t have a 30-foot backyard and I can’t put a pool in it. I’ve got 10 feet or 12 feet, and my kids can play in it. I can get into a new home, and I can build equity. I’ll compromise today for five years from now.’ 

Land prices haven’t yet reset to the point where builders can always offer homes in the most affordable price ranges, he said. Land speculators, who bought up foreclosed properties at steep discounts, are holding onto parcels until they can get a higher premium.

Consequently, Killinger said, he looks for land in cities such as Roseville that lowered their fees amid the housing downturn. Often, he said, the biggest competitor for many new homebuilders are nearby existing homes, so KB Home has focused on improving energy efficiency. If an existing home has air-conditioning bills totaling $400 or $500, he said, and that bill is $150 for a new home, the consumer recognizes that a lower utility bill will help pay a slightly higher mortgage.

Killinger, a Placerville resident, has been with KB Home for a little more than a year, a post he sought because it brought a larger territory and fresh challenges. He has served on the board of the North State BIA since January 2010.

He described builders as cautiously optimistic that the industry will continue to see small but steady growth for a while. Last year, he said, roughly 3,300 new homes were sold in the Sacramento region, up from about 2,400 in 2014. Statewide, the number of construction industry jobs grew by 6 percent year over year in November, the most recent period for which figures are available.

After surviving the crucible from 2008-13, Killinger said, he and other builders are carefully studying the resale activity in every market before making decisions on which communities are ripe for new housing developments.