Business Monday

Q&A with Craig Perry: Reflecting on building housing, and on the affordability gap

Craig Perry, president of Perry Ventures, at his office in Broward County on Oct. 8, 2015.
Craig Perry, president of Perry Ventures, at his office in Broward County on Oct. 8, 2015.

More than 5,000 families in South Florida are living in homes built by Craig Perry.

He grew up in what was unincorporated Miami-Dade County when land was plentiful. He founded Centerline Homes in 1993, and over the next 20 years, developed and built thousands of homes in Miami-Dade, Broward and Palm Beach counties. As land values soared a decade ago, he diversified into the Orlando area and North Carolina. Perry sold Centerline in 2013 as the home-building industry was consolidating in the aftermath of the housing collapse.

WLRN-Miami Herald News spoke to Perry about housing affordability and finding a balance between the demand for homes and the supply of land. These are excerpts from the conversation.

Q. What’s your assessment of home affordability in South Florida?

A. The cost of housing is very expensive, and it’s because of the barriers of entry you have — the ocean on one side and the Everglades on the other. Then you have the urban development boundary that limits the availability of land, which ultimately translates into the cost of how we were building homes.

Q. How did you approach the affordability question?

A. [We] never looked at it as affordability but what the market would pay for although it was a part of the equation. A whole different set of matrix has to determine whether or not a product that you’re going to deliver is going to be suitable for what the price is in the market.

Q. How did the barriers of entry that you mentioned earlier impact homes that you built and some of the real estate investment opportunities you’re seeing now?

A. When we were making South Florida investment decisions, the cost of the land was going so fast so quickly that you always looked at allocating capital to different places. The appreciation didn’t justify what you could raise your house price to for an order to deliver. That’s why we ended up in North Carolina, South Carolina and Orlando.

Q. From the perspective of the buyer of a Centerline that you built 15 years ago in South Florida, that affordability gap has widened.

A. Yeah, because on the supply side as long as you’re allowing good delivery with competitors within a marketplace, you have to offer a product that’s more competitive [on price]. When you have less supply, you have fewer homebuilders and you have fewer communities to choose from, so the higher price that you can charge. Today there is just very limited supply of land where you can affordably build any kind of [homes].

Q. The lack of availability of land has led to the urban infill. We’ve seen this happen in downtown Miami, and to some degree, in some places in Broward County where urban centers are becoming more populated. How is that driving affordability in those areas?

A. When you’re going in and retrofitting or you’re doing infill, it’s much more expensive because you’re fixing a lot of problems. That kind of product is unique and it has to be tailored. It becomes very expensive to build that kind of product on a consistent basis.

Q. Why you think that is?

A. Because of the lack of supply. You have very limited good locations of available land that can be built on at a price that’s reasonable.

Q. You’ve built a lot of homes across the Southeast. You are from south Miami-Dade. What’s your impression of the affordability challenge today?

A. There is an appearance of affordability at the moment, but I think most of the product that’s coming out of the ground is much more expensive. But going forward, there’s just not anything that we can see that provides affordability in places where you want to be.

Q. How does a community wrestle with that challenge of the lack of affordability of quality housing in places that residents want to be?

A. You have to have good government planning. There are ways to solve the problem, but you have to have a will.

Q. Give us an idea of what that kind of approach would be from the perspective of a homebuilder.

A. There are plenty of areas outside the urban service boundary where you can develop. If you took a macro approach when you looked at an overall market area and you brought in good planning, then the supply side would be closer to the demand side. [That] would create the need to be much more competitive.

Q. Does affordability matter to a homebuilder like you?

A. No.

Q. Why not?

A. Because all you’re doing as a builder-developer is looking at the return on the investment. The price is the price. If the market is willing to bear higher costs, then you are going to sell it for more, so you get a greater return. You don’t look at it at all as to what’s affordable or not.

Q. Are you seeing opportunities in the middle or lower market at all in South Florida?

A. Very little. There are opportunities happening in the middle and the lower end; they’re not areas necessarily where you would think that they would work. They are areas that people are being forced to go to just because there are no other alternatives. There was a push [some years ago] when Port St. Lucie started to work [as a homebuilding market] because it was an affordability market. People were willing to drive because that was the only place they could afford a home. I’m not sure if that will come back.

Q. Do you think the housing affordability challenge has slowed down growth in South Florida?

A. Yes. Most of the [housing] product being delivered is for [rentals] and not related to “for sale” [homes]. I don’t know when that ever comes back until they solve the supply-side issues. Most of the land that’s left is very, very expensive to build on. They’ve had some good successes with creating urban centers like Dadeland, but I’m not sure if you could create that same kind of urban setting in Homestead or Ojus. I just don’t think people are going to be willing to pay the rents.

Craig Perry

Personal: 51, married.

Current role: President of Perry Ventures.

Additional roles: Florida Institute of Certified Public Accountants, Kaiser University Board of Trustees.

Career before his current role: Founder and president of Centerline Homes.

Education: Accounting and finance degree from Florida State University.

Connection to South Florida: Born and raised in Miami, graduated from Palmetto Senior High School.

Interests: Boating and fishing.

About Perry Ventures: A diversified real estate investment company specializing in home-building equity, land and income producing assets.

Company address: 1000 Sawgrass Corporate Pkwy., Suite 110, Sunrise.

Phone: 954-210-7352.