Western Deolers Leod Woy in'Second Home' Ideos; , Boom Lumber, Plywood Sqles in Vqst New ftlqrket

The llon's share of tho exploding twohomo market wlll go to tho lumber dealer provltled he can recapture the inltlatlve thot ls stipptng away from hlrn ln many areas of the United States. The mass movemont of famllles toward owning two homes has causeal some new headaches-ffnanclng, avallability of lartd, speciallzed deslgn and bulding methods-but solutlons a,re avallablo.now to the lumber dealer who wlll 'brush away the cobwebs of tradltlon and look clearly at what ls happoning.

These were the concluslons of 14 lumbor doolers from a,ll over the U. S., many of them slready active !n the second-home ffold, and the edttors of 14 I'mber deoler trade magazlnes, who got together for a recent conference ln Tacoma, Wash.

The two-day meeting was sponsored by the Douglas Fir Plpvood Association to explore this new market and discover how best the lumber dealer can gain a toehold in it. The association also wanted to know if the lumber dealer was the logical ma^n to handle the bulk of this growing business and whether DFPA's promotional work, ' and the materials designed to push it along, are on the right track.

Flnanclng Avallable

Financing, the biggest dilemma most dealers face, is widely available. A vicepresident of a large Salt Lake City savings and loan said his establishment is even offering inducements to dealers to bring this business in. Another speaker, repreBenting a nationwide discount firm, said even more liberal terms and longer payment periods are available now through 3? offices. fn addition, figures were introduced that indicate banks can be persuaded to enter the second-home market on a big scale.

A number of ways are open to obtain land, which is becoming more scarce and higher-priced every day. "Packaged" developments of second homes may be the solution for some. Artificial lakes, U. S. Forest Service or Indian lands and land owneFship by the dealer will open the door for others.

Cabin design is another key to success. Preference will differ from area to area so far as appearance is concerned, but an easily panelized desigar is a, basic requirement for a major entry in the field.

Model Is Best Sales Aid

Merchandising and selling take many forrns, but some unique successes indicate that realtors can help move cabins when their sale is linked to land merchandising, and that going directly into the prospect's home works well. There was general agTee- ment that a model cabin is the best sales aid a dealer can have.

Although they felt DFPA should increase the number of "down-to-earth" plans it offers, the dealers agreed that the association's campaign is playing: an important role in expanding the general market, Some specific changes were suggested in D!'pA's point of sale material, but the basic campaigar and its expansion by the dealer through his own local advertising, was solidly endorsed.

A modet advertislng campalgn by DFpA ln a fow do-lt-yourself ma,gaztnos gave the first lndication of how tremendous the ln- torest ln second homes would be, John D. Rltchle, DFPA dlrector of speclal products and advertlslng, told the conferenoo partlclpants.

"All we ofrered was ideas-no plans. We got 150,000 responses. And we proved to ourselves that this wasn't a seasonal interest. We got as many inquiries in December as we did in July," he said.

Words Farnlllnr Now

"Five years ag:o our managing director, W. E. Difrord, told us this was coming. He pointed out that there is more leisure time and the unions are trying for even more. There's more money, more retirement plans-more of everything that makes for leisure spending. l'irst, we were skeptical, His words sound pretty familiar, now."

Tho tnttlal response prompted the ffrst Saturday Evenlng Post campalgn, Rltchie adiloil. And although lnqulrles were not encouraged-there was no coupon to cllp and people who wrote had to send a, dlme +ach ad has drawn an &verage of 11,000 requests for catalogs and lnformatlon.

"These things encourag:ed us to go ahead with everything we have," Ritchie concluded. "We have only started and we feel that everything we have done so far is only part of what we will do in the total picture."

Donald A. Jaenicke of DI'PA's publicity department, who has been making a concentrated survey of the second-home market since late fall of 1959, called the trend a "sleeping giant."

Accordlng to the Natlona.I Assoclation of Ilome Bullders, he sald, e19 6llliel people already have leisure homos.

Jaenicke quoted a Ford Motor Co. executive as saying that in Michigan, Wisconsin and parts of Minnesota, the second car's biggest competition is the second house.

"Without making any predictions, I'd like to show you the figures that prove to us we are only seeing the beginning of this thing," he added.

Jaenicke said there is no clear-cut income group that makes up the second-home market; many are being sold to lowermiddle income earners. And in the United States the number of people earning 94000 or more per year has leaped from 12 million to 36 million since 1950.

Another factor in the growing market is the baby boom. Nearly 4.5 million babies will be born this year, and their parents are building cabins to take the kids to the country for the weekend.

At the other end of the age scale, the population over 60 is 65Vo greater than it was in 1940; this is the enormous retirement market.

And since 1946 both leisure time and surfaced roads have doubled.

Buylng Is Analyzod

So, Jaenicke pointed out, there are more people with more money and more leisure time, and vacation areas are more accessible. Wliy are they buying cabins ?

"There seem to be about five basic reasons," Jaenicke said. It's a chance for people to get out of the rut. A vacation cabin gives people a chance to be creative. The cabins have retirement potential and, fourth, they offer,a good financial investment. And a second home has even more snob appeal than a second car.

"These are things you should know when you make your appeals to this market," he pointed out.

The cost of most existing cabins is in the $1500 to $3500 range, Jaenicke said, and the cabins consist usually of a shell that can be improved or enlarged later.

The key potnt in his survey, so far a"s the lumber dealers were concerned, ls tlpt 8O7" of the potential cabin bullders ho contacted plan to get their materials from dealers, Ja,enicke said.

I)ealers Lag Behind

The group contacted was a representative number of those who wrote DFPA for plans, for which a 25-cent charge was made. While 7oo/o of them said they planned to build their own cabins, Jaenicke pointed out that those surveyed all had requested plans and apparently were do-it-yourself minded.

A not-so-welcome discovery, from the dealers' polnt'of view, was that in nearly every area, builtlers, prefabricators and contractors were far ahead in developing this market.

No matter who he is. however. the man who is selling cabins usually has flve elements to his program, Jaenicke said.

"The number one thing' is a simple, economical design. The second is to have some kind of a model eabin. A scale model is good, but a full-size cabin is better.

"The thlrd thlng ls some kind of brochure, coupled with newspaper advertislng. You have to tell people about your product.

"The fourth is a facility to pre-cut a cabin package, whether the seller is going to erect the cabin or not. Panelization still seems to be the key to success in many areas of this market.

Good Buslness for Lender

"Finally, comes adequate financing. People almost never can pay cash, in a mass market. They want to know how much a month."

The short-term, high-rate lender is a dealer's best bet to finance cabins. Robert Murray, vice-president of Prudential Federal Savings and Iran of Salt Lake City, said his organization is so enthusiastic about this market that it ofrers the dealer a one percent discount as an inducement to him to broaden his promotion.

F inding this money may take persistence, Murray said, but he feels it is available to virtually every dealer.

"Private loan companies simply can't afford the long terms of these transactions," he said, "and their rates are pretty high. Big discounters such as A.B.C. and C.LT. can do a lot for you, and banks can be

The D.F.P.A. has been push- ing hard the "SecondHome" idea at the lumber dealer conventions, too. This scene was at the recent April convention of the SCRLA in Los Angeles. In front of the attractive Leisure-Home display board, the two DFPA representa. tives give the message personally to an eager dealer pr0specr.

In addition, the DFPA's Don Jaenicke addressed the LMA convention at Yosemite educated. They have lots of experience with home improvement Ioan plans.

Limitetl to Home Owners

"Savings and loan associations are coming into this market more and more now. It's a very attractive area, from their with no down payment for a period of five years. Payments are $78 a month for this maximum amount."

Murray said his firm deals only with homeowners and usually makes the Ioan on the equity the borrower has in his primary home. Resort builders, however, can take advantage of FHA Title One provisions. he said. to borrow for cabin construction.

'lThese are high-yield loans and they are large deals; they're a lot better than the typical $175 business most of us get. They are a lot shorter in term than mortgage loans,r so they provide liquidity; we can turn our money over faster.

"And one of the best things about them is that the dealer handles the paper work. We can have a girl take six applications over the phone from dealers in the time it would take to get one application in the office. We phone for the credit check and we can tell the dealer yes or no in one day, usually."

Machinery fs Ava,llable

Murray pointed out that dealers may have to do selling jobs on their local lending agencies before money will become available, and that many mortgage lenders simply won't enter the field because they have their hands full just providing conventioiial money.

standpoint. Although the law is a bit hazy, we operate under a provision of the National Housing Act that has been interpreted to allow us to make loails of 93500

Francis W. Brown, editor of Western Building, said a recent survey shows that the number of banks in the 13 western states willing: to ofrer 5-year loans has jumped from 78/o of the total to 98Vo in two years. He said this indicates the rnachinery is there to be used.

Money in larger amounts is available speciflcally for the second home market through the 37 offices of -the nationwide Allied-Building Credits corporation, Duane Miner, Seattle manager, told .,the conference participants. He said a comprehensive progTam has been workedi out and is in operation in most ar6as now.rlt isp flexible setup, he pointed out,',4nd raa4y tdtal man-, agers will be willing' to adtrpt - itj to locaf needs. .3 ,.., {_trj , ,: .J

No Land. fte"t"lUuorr"'t

-

The maximum' ardbunt''A.B.C. wiU aitow is 95000, with 7 ye#slrto pag, l.ffi.b1rys; the mortgage-it makes nd.loans-and-lthe, land must be free ah'd cl6br: Ttrir,,loansYard not..necessarily predicated on thd value dfl the land so much as they are on the abilityr of the borrower to pay, Miner said, andj A.B.C. sets no restrictions on the type of:. land that may be used as sites. ,,. ,. ''

One illustration of this plan's flex.ibiHtf occurred in the description of the dibson ':* - " -- "

Lumber Company operation in Albuquerque, N.M. Davld E. Gibson III, who attended the conference, said the local A.B.C. manager adapted the plan to give the customer six months in which to build his cabin, if he preferred to do it himself. The dealer was committed to go in and finish the job at the end of this period if the cabin wasn't completed.

Alan Hoelting, of Pope and Talbot's Seattle real-estate division, stressed the need for packaging in the second home fleld, and the need for the materials supplier, the realtor. the financier. the land owner and the contractor to join forces, particularly in areas where premium land is beginning to be scarce.

Developments Make Sense

Pope and Talbot is a pioneer northwest lumber firm that at one time owned virtually all the waterfront on Puget Sound. Hoelting's division acted chiefly as liquidating agent for logged-over land until recently, when the company beg:an to realize its sale of waterfront lots was leaving it with big blocks of landlocked property of little value.

Because of the high price of beach property--$150 a front foot in many cases-on Puget Sound, Hoelting sug:gests that developments with common recreational facilities, such as beaches, make more sense from every angle. They give the buyer more for his money, they utilize land that otherwise would be worthless, and they give small businesses a chance, through cooperative effort, to compete with the building giants that are entering this field.

Hoelting said the example he used to back up his argument, while local in character, could be applied to almost any region of the U.S.

"An individual who wants a summer place can do one of two things. The flrst one involves a lot of looking for a site. That means ferry rides and a lot of time. Then let's say he flnds land at 975 a foot - -he pays $7500 for his property.

Big Price Difference

"After that he flnds some guy with a bulldozer to clear it off. That's $500. when you get your access road in. Then you have to dig a well. That's $1000. A local contractor throws up a shack for 95000 and the subcontracting, what with getting an alcoholic electrician, runs another 91000. Throw in troubles with the building code, rain, zoning and so forth, and you've got

Two (or Three) Ilomes Neeiled

The double standard of living is golng strong, especia,lly in the West. The go:rl for most America,ns was once two chickens in every pot, then a, double garage, then two cars-now it is two homes.

Californians, particularly those in the Southland, are leading the race to get a little place in the country for weekend living, according to Robert M. Chamberlain, president of United Farm Agency. He clalms his firm sold "$40 million worth of 'llttle country places' last year," abottt 9O/" of them to city dwellers.

Not only that, but the coming advances in living standards might even seem to require three homes: one in the city or suburtrs, one in the desert for winter weekends. and a third for summer at the seashore or ln the mountalns.

$500 more, for a total of at least $15,500, and there's no dock or waterfront development.

"On the other hand, let's say he gets a brochure about a platted, 10-acre section with 300 feet of waterfront that's been made into a community beach for 20 sites. There's even a dock for boat mooring: and water skiing. They offer a nearly-finished cabin rvith full ownership of land and cabin, plus an equal share in the community waterfront, all for 99000.

"Here's horv it's done: The value of the land is the same. The developer pays $22,500 for the 300 feet, plus 94000 for the back acreage. Bringing in land-clearing equipment once instead of 20 times costs $5000. A deeper well, with bigger pumps, costs $6000, only six times as much as a well for one site. With Lu-Re-Co construction, you build 20 cabins in 10 styles for $4000 each. There's $80,000. We throw up a dock, clean up the waterfront, put in some picnic tables, tennis courts, badminton courts-with some miscellaneous costs, the total is $122,500. The average sales price is $9000, so you have 9180,000 gross reve-

Cooperatlon Is Necessary

"This can all vary, of course, but the idea is sound. And which one will our homeseeker buv?

"How we can get independent, diverse interests together to package second home deals is the problem."

Applying these principles to other parts of the country is not so difficult as it seems, at first. GEORGE STRA\DBRIDGE, Banning, Calif., says his firm, Homestead Supplles, Inc., has sold thousands of cabins because it could "supply knowledge on how to help people" with leased government tracts. There is a great deal of land available for leasing in national forests, on the shores of federal reservoirs and on Indian reservations.

WELDON WALKER, president, WalkerKurth Lumber Company in llouston, Texas, has been working with a developer who created his own lake by damming up a stream on his property. The lots were sold individually and, as they have been paid for, the owners are erecting cabins.

Success With Realtors

David Gibson of Albuquerque has also worked out a successful operation built around realtors.

"They didn't have the financing to provide for the cabins, and we didn't have the land to provide for them, so we got together with six realtors. Part of our deal was that they would each buy a model cabin from us and have it erected on their property. We've put on meetings for the salesmen and provided them with literature. We pay a regular real-estate commission on the sale of the material, but not on erection costs. We're g'oing to expand the plan this summer."

Robert Rosenthal, 0f Crystal Lake, Ill., Lumber and Fuel Company, plans to develop a vacation subdivision, and Hugh Robertson's firm in Grand Forks, N.D., is building a number of cabins on one of two entire lakes it purchased.

Robertson operates an extremely successful cabin operation and one of his designs, following a DFPA plan, has been built in the yard and moved in completed form to the buyer's lot.

"We've had wonderful luck with this design," Robertson said. "From listening here, and from my own experience, I know some of the other designs aren't practical, however. Design is important, and easy construction is really important."

"There's another thing about design," 'Ar,;# of glass. A lot of cabins are built for families that like to live in them all summer. The husband comes out just for the weekend, and the wife doesn't like living in a goldfish bowl in some remote area. There's no secure feeling behind that glass. And in the desert there's the problem of a lot of heat during the day and cold nights."

There seems to be agteement that a cabin design should be selected with the sales area in mind, and that too many present designs are "out in left field."

Sales appeals have to be adapted, in most areas, to the kind of market that is available. Theodore G. Monk, who operates a lumber yard in the Bronx, feels that he is in the best possible market; the center of the area where potential second home buyers live year-round.

Fred L. Dill, of Carmel, N.Y., about 50 miles from New York City, gets considerable business because he is located, on the other hand, in the same area as the building sites. Where Monk delivers up to 120 miles away, Dill is concerned with his immediate area only. Dill also gets much of the finishing business, where the prime seller has sold a shell.

Mike Symons, of Sonora, Ca,lif., in another vacation area, makes most of his contacts by mail to persons who have bought vacation property. He gets their names from the county court house.

"Doll llouse" Sales Ald

A sales aid developed by David Gibson bears mention:

He provides his customers with a cutout paper model of their cabin with the floor plan surrounded by the walls. A few cuts with a pair of scissors and the walls are folded up around the floor plan, then the roof, cut from another sheet, dropped on top.

"Each numbered panel is shown in place, so the do-it-yourself builder doesn't have to visualize anything. All he has to do is look at this model.

Variety of Packages

said DUNGAN GIBSON, of Gibson Lumber Compa,ny in San Bernard.ino, Calif. "Too many of these desigrs have big expanses

"Another thing we have worked. out," Glbson continued, "ls a variet5r of ways to deliver tho cabln. \ile'll dellver the package