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Monday, January 9, 2012

LONG ISLAND HOME BUILDER TURNS TO MODULAR HOUSING TO SURVIVIE

During the housing boom, Howard Kipnes, president of Cedar Knolls Homes, a residential builder in Ronkonkoma, Long Island, NY, would purchase land on speculation and build homes when he got a buyer's contract.

That business model took a hit with the housing recession and the housing bust that still holds Long Island in its grip. The number of permits for construction of single-family homes there fell to 90 in November, compared to 160 in November 2007, according to statistics from the provided by the NY State Builders Association.

To stay in business, Kipnes had to find a new approach, one that would reduce the demands on his finances and shrink the time it would take to build homes.

Howard Kipnes, president of Cedar Knoll Homes
"It was pretty much adapt and survive," said Kipnes, who sold off all the land he owned about four years ago.  It's not uncommon these days for businesses to have to adjust to a radically different environment.

For Kipnes, buying land on spec and building single-family homes over many months would no longer work in a time of plunging demand, tight financing and falling prices.

The solution he came up with: building modular homes on clients' property, and doing more renovation work.  Part of the appeal is price: Modulars tend to cost 5 percent to 10 percent less to construct than traditional homes.

But an even bigger appeal, Kipnes said, is how quickly they can be constructed, as they come in pre-assembled pieces. Depending on size, they take about half the time to complete: typically three to six months, compared to six to 12 for traditional homes.

About two years ago, Kipnes created an alliance with Westchester Modular Homes in Wingdale, N.Y., which manufactures custom-designed, factory-built homes that are sent to Long Island for Kipnes to assemble.

Another victory in the quest to convert site builders to the Modular Home side of the business.


1 comment:

Anonymous said...

This guy in a genius. In his own word he is adapting to survive. He figured out that he should not sit on hundreds of thousands of dollars on spec land.

Modular construction works but the business model must also work. Modular construction is not a miracle cure.

I wish him the best of luck.