Third-generation homebuilder Keith Grant learned from his ancestors and today leads his industry’s state organization.
From the outside, Keith Grant’s lifestyle seems idyllic.
The son and grandson of well-established developers and the owner of his own multimillion-dollar homebuilding business, the 38-year-old Germantown resident is also married with two young children.
He’s active in his church, his roots are deep, and he recently was installed as 2012 president of the Homebuilders Association of Tennessee (HBAT). Comfortable and well-connected are just two ways to describe him.
But like every business owner large or small (especially in his line of work), Grant has experienced his share of hiccups over the years. And unlike many others in his field, he’s managed to keep going during the worst recession in decades. He’s seen construction numbers plummet since the housing bubble burst in late 2007, and he’s known the agony of having to cut staff.
He’s seen the demand for new-home construction drop from more than a million a year nationwide to about 400,000. He’s even had to reach deep into his pockets to keep himself, his family, and employees safely above water. And now, after weathering this most nuclear of winters, he’s beginning to see signs of life out there.
“We lost money for two years and then we started making money in 2010,” Grant says, adding, “It’s not fun funding your company.”
Grant began his business 16 years ago at the age of 22. His younger brother joined him in 1999 and the business became Keith & David Grant Homes. The brothers operate under the umbrella of the more recognizable Grant & Co., along with their father (Richard Grant Homes), sister (Kim Grant Homes), and other family members. The family patriarch, Carl Grant, who recently passed away, started the family building tradition in the early 1940s.
Even so, Keith Grant is no stranger to earning his keep. He even started a lawn service as a 12-year-old and began framing houses in high school. His dad and grandfather were ever willing to lend advice, but the younger Grant had to make it himself.
“By starting your own business, you have to learn everything and you have to learn it quick,” he says.
To Grant that meant everything from site selection to cultivating relationships with reliable subcontractors to dealing with a litany of government regulations. It meant networking and dealing with banks, and it meant meeting structural and environmental guidelines. That kind of knowledge and more paid off when Grant served as president of the Memphis Area Homebuilders Association in 2007, and it’s paying off now as he takes the reins of a statewide organization his grandfather helped start and lead half a century ago.
“At the HBAT, we are dealing with the state legislature, the governor, and various state regulatory bodies, and a few of the commissioners,” he says.
On his agenda this year is making sure the Tennessee Home Construction Jobs Development Act is passed during the legislative session that began in January. The bill proposes to grant $6,000 to new, qualified homebuyers in an effort to stimulate an industry that has lost more than 36,000 construction-related jobs since its peak in 2007. If the legislation passes, Grant estimates that 4,900 new jobs will be generated.
Another item is preventing a rule that would require sprinklers to be placed in all new homes. Grant argues that sprinkler systems not only can cause more problems than they solve, mainly leaks, but they boost housing costs and discourage buyers. Every $1,000 added to the asking price of a house is just one more reason not to buy it, and sprinklers ratchet up the price by $2.50 a square foot.
“Anytime you pass a code that increases the value of a house, it drives down people’s ability to buy a house,” he says.
He cites a recent University of Tennessee study and adds that safety isn’t a concern with new construction, either, because of the building codes enacted after 1998.
Also on Grant’s agenda is making sure the Tennessee Public Improvement District Act, which like the construction bill is a carryover from last year, passes this time around. It offers another way for municipalities and developers to fund infrastructure needs. The main reason for that is because of the tighter lending standards enacted after the subprime mortgage crisis.
“A bank right now will not fund any new development, period,” Grant says.
That, of course, suppresses job creation and tax revenue, leading to a continued downward spiral. Or, in Memphis’ case, a depressed but still relatively stable marketplace.
For example, Grant expects to close on 130 properties this year compared to about 125 last year — not the stellar numbers of a few years ago, when building permits countywide tallied more than 4,200 compared to less than 600 now — but not a huge fluctuation, either.
“I’ve got 40 jobs ongoing right now,” Grant says. “Every house creates three jobs in our economy.”
Also, prices have been relatively stable the past three years, according to data provided by the Memphis Area Homebuilders Association. In 2009, new home construction was at 675. It spiked to 983 the following year and then dropped to 594 in 2011.
Even with the current conditions, Grant sells a house in about 60 days. He attributes that to the quality of his homes, which range from $140,000 to more than $200,000, and the dearth of inventory nowadays. “The reason prices are stable is because there’s no new inventory available.”
That’s one reason the HBAT wants to delay reassessment of properties until they’re sold to the first owner. Right now, land is reassessed when it has been subdivided and again when a lot has been improved with new construction. Grant and others would prefer the property tax liability to remain lower until a buyer gets the land and house.
Also, proposed legislation would require tax assessors to issue parcel ID numbers right away instead of only on January 1st of each year. The lag can cause sellers to have to pay the entire tax bill before a closing occurs.
All of these changes, Grant says, will help his industry bounce back. In the meantime, he continues to heed his father’s and grandfather’s advice: “Treat people as you’d want to be treated, always do what you say you’ll do, manage your money carefully, and save as much as you can.”
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