Beazer Homes chairman and CEO Alan Merrill talks with Green Builder Media CEO Sara Gutterman about the builder's commitment to deliver 100 percent zero energy ready homes by the end of 2025, and how VISION House Las Vegas: Crossing the Rubicon proves that efficient, healthy, low cost of ownership homes can be built at scale.
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Sara Gutterman: I'm Sarah gutterman, I am CEO of Green Builder Media, and I have the pleasure to be here today with Alan Merrill, chairman and CEO of Beazer Homes, the country's 11th largest building firm, where we are thrilled to have the opportunity to work with you and the Beazer team on the vision House Las Vegas Crossing the Rubicon. It's a very important and meaningful and timely project, and we want to talk with you a little bit, a little bit about it today.
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Sara Gutterman: But first, before we dive into the project, I'd love to hear from you. The housing industry is experiencing rapid transformation. What are the changes that you are seeing and what are you most excited about?
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Alan Merrill: I think it's interesting. We've got such an enormous shortage of housing in this country, particularly for sale housing, and it is it's a challenge for prospective buyers. But once they attain the ability to become homeowners, I think they have become quite selective. It's not just any home. So expectations for efficiency, for resiliency, for sustainability, I think are driving the change that you're talking about.
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Alan Merrill: I think our buyers expect innovation and and evolution from from our industry and from our company in that area. And we're excited to meet the challenge.
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Sara Gutterman: Alan, what you're saying makes me happy because it really matches the data that we've been collecting through cognition, smart data. All of the trends are showing that today's home buyers are indeed looking for more sustainable, all electric net zero healthy, connected, resilient solar plus storage homes. And they want it as a baseline, right? They don't want it as upgrades.
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Sara Gutterman: And Beazer is delivering that. So can you tell us a little bit more specifically within those larger categories what you're seeing in terms of that consumer demand?
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Alan Merrill: Sure. I think one of the things that is in the process of happening right now is translating the technology and building science into benefits that resonate with consumers. And look, it's a struggle for us as well. But to to remove some of the buzzwords and some of the jargon and really put it in a context that it's easily relatable, you know, probably the top of most buyers list when they think about these features and characteristics.
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Alan Merrill: Is cost the cost of occupancy, the cost of ownership, lower utility bills are real. And in an era of rising energy costs, even before we get to climate science and climate change, just the ability to have control and or lower payments, that really resonates. And that's one of the things that advanced building science has been allowed, has allowed us to to deliver.
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Alan Merrill: You know, there are a couple of other things. One of them doesn't often fall into the category of of maybe climate science, but it is very tangible to buyers. And that is the the sound and the feel of being in a dwelling that is properly insulated. It sounds different. It feels different. It feels like there's more privacy, it feels better built.
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Alan Merrill: But I can't tell you the number of times I've had buyers say, this home sounds different. Well, of course there are a lot of building materials and building science involved in that, but the thing that resonated was it just feels and sounds different. And then and then a third one, which is very much in the health arena is is air quality the extent that again, harkening back a little bit to the pandemic.
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Alan Merrill: But but even before that, you know, the the incidence of allergies has grown exponentially. And, and so for people to have high quality indoor air and understand that they're breathing cleaner air, even as we are reducing the number of times per hour. The air is being exchanged. They really they benefit from that. They appreciate that. And, you know, we struggle a little bit because there's a lot of metrics in math that we can use.
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Alan Merrill: But those ideas of healthier air, quieter home and a lower utility bill, I'd say those are kind of the big three.
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Sara Gutterman: So are you finding, though, when you are selling to younger homeowners, that they are getting that equation faster and more readily, or do you see that it just depends on the market, the demographic? Is it not quite that black and white as you break it out.
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Alan Merrill: That that younger, that first time buyer, they've waited to buy a better home, they've had to accumulate the means. But we do see what you're saying, that they're not buying the first home that they can afford. They want things in the home. And frankly, they also want certain locational attributes. And and I think that's that's part of the equation beyond just the higher efficiency of the homes.
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Sara Gutterman: So we've been talking about market transformation from a conceptual standpoint. But these are is very much playing a pivotal role in that transformation. So can you talk a little bit about that role that you're playing in specifically talk about your commitment to zero energy ready homes across your portfolio of homes throughout the country.
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Alan Merrill: We work for a long time to improve the operations of our business. We had a lot to be humble about and a lot of things that we wanted to get better at. But 4 or 5 years ago, we really had to think about where we saw our future. You know, I like to say the other team gets paid to and the other team being any of the other building companies that we compete with.
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Alan Merrill: So we decided that we needed that we needed to have a very clear North Star, to use a an analogy. And for us, given the inevitability regulatory change and what we were saying, this thing that we're talking about, consumer preference evolution, we decided that we wanted to be leaders in in energy efficiency. And we've been building Energy Star homes for 12 years.
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Alan Merrill: So this isn't this wasn't a radical departure, but we wanted to take it to the next level. So we really investigated and learned about the Zero Energy Ready program. At that time, no other major national or multi market builders had embraced it, and we decided that there was a path to do that and our team got excited about it.
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Alan Merrill: So we made a commitment three years ago that 100% of the homes that we deliver will be zero energy ready by the end of 2025. And we have been plotting our progress quarter over quarter for the last couple of years. It's really accelerated now in the last year. But I think for us, it gave us a way of standing out, a way of being different and very aligned again, both with regulatory and the consumer preferences.
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Alan Merrill: You know, I believe ultimately our our peers, our competitors will will adopt and adapt and do many of the things that we're doing. And we decided that it would be more interesting, hopefully more value creating for our shareholders to get there first.
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Sara Gutterman: Well that's wonderful. You talked about your team's excitement, and I can tell you that our team is very excited as well, because we get the opportunity to work with you on a project that I think will be a launching pad for that Zero Energy Ready Homes initiative, or You're Ready initiative, as I know you call it internally. So let's talk a little bit about the vision House Las Vegas.
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Sara Gutterman: We've given it the the subtheme of Crossing the Rubicon. And we really believe that what Beazer is doing is indeed crossing the Rubicon for the housing sector, for the building industry, because there is no longer a world in which net zero all electric, healthy, connected, resilient, solar powered homes are not available at some kind of an attainable price point.
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Sara Gutterman: You are showing that you can do that and that we can do that as an industry. And so we wanted to give that theme to this vision House Las Vegas project, to really give it the gravitas that we believe that this moment in time deserves. So can you talk a little bit about this project, your perspective on it, and how you feel like it can really raise the bar and raise the floor in the housing sector with respect to sustainability?
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Alan Merrill: Well, as I said a few minutes ago, we've we've made a commitment to do this. We are going to have zero energy ready across our entire portfolio. And frankly, we wanted a partner in an opportunity to be able to promote that. I mean, we promote it every day to our home buyers, but we wanted other not just our competitors, but regulatory authorities and others to see that this is not a science experiment.
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Alan Merrill: This is something that can be done at scale, and it can be done within the combined constraints of consumer preferences and affordability, and the expectations that are on public companies to generate returns for shareholders. I think we're doing that. And I think having something like the vision House gives us the opportunity to show that, particularly with a partner such as yourselves, so that you can help us tell that story.
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Alan Merrill: I mean, we sometimes get a little parochial and think about the features and the benefit of the home, but having a partner to help us talk about this at a broader level felt like we had earned the right and felt like we could contribute something to that, but we certainly couldn't do it without without your partnership.