TEXT OF INTERVIEW
KAI RYSSDAL: You start out as a carpenter. At 18, you build and sell your first home. It's a five-room bungalow in Detroit. You decide to start a company. Over the years, or more specifically, over five decades, your company becomes the second largest homebuilder in the United States. Last year, 45,000 houses. $14 billion in sales. Today's Conversation from the Corner Office takes us to Michigan. We meet Bill Pulte, the chairman of Pulte Homes, at one of his new subdivisions in a Detroit suburb. And really who better to ask about the hiss coming out of the housing bubble.
PULTE: The demand for housing is there. In many cases the supply is not keeping up with the demand. What's happened temporarily here, I believe, is two things: One is that never before in America was there investors in housing. In 2001, when the dot.com business went to pot, a lot of these investors realized there was a lot of money being made in housing, particularly in Florida, California, Vegas, and Phoenix, and they started to buy and make money investing in single-family housing. These investors realized that for right now they have probably peaked in appreciation, so they've dumped a huge, huge number. I've heard numbers all the way up to 500,000. Five hundred thousand houses dumped on the American markets. The market is still strong but it's got to get rid of the glut it was stuck with.
RYSSDAL: Building homes, it seems to me anyway, is sort of an inherently intimate thing. You know, you're building someplace that people are going to live and raise their kids and send them to college and one hopes, anyway, be there for a while.
PULTE: That's true, but how many can have a custom built car? I mean really custom built? There's very few people. And by building an economical house that has value in the right location, the people will buy it just like they will a standard car. Now there are a lot of people who think you've got to customize everything. I think if you can give great value you don't have to customize everything. In fact, I'm convinced of that. Knowing where to put the costs is very important.
RYSSDAL: When you go to somebody's house, whether it's for dinner or for some function or an event, what's a sign to you that it's a well-built house?
PULTE: You really can't tell because all you're seeing is the cosmetic finishes, which doesn't really make a good house. That's where a lot of people go wrong. They think that the cosmetic finishes make a good house or the better house. It starts with understanding what the soil the house is going to go on. You must understand what that soil is and secondly you must build the foundation. Third is the framing structure has to be correctly built. Then the correct mechanical system, meaning plumbing and heating; they got to be in correctly, and the wiring has got to be in correctly. The roof is the next important thing, because if you have a bad roof it's going to leak. And then the least important is the cosmetic finishes that you see but it isn't really the important stuff because I could take a good shell and do a miserable job with the finish -- people won't like it as well, or I can take a lousy shell and do a good job with the finish and people love it except when they've lived in it a few years and all of a sudden you've got a lot of problems.
RYSSDAL: The first house that you built, I've read, was a five-room bungalow. I'd imagine they were pretty small rooms or traditionally arranged. How are you guys doing things today?
PULTE: When I first started to build houses nobody ever thought of a family room. They had a living room, a dining room, a den, which was a little tiny room. A kitchen, a nook. But one of the first things that started to change in the '50s was the idea of a family room, which was a big playroom for the family, OK? And then if you go through the period of time since then, they put more bathrooms in. They went to the deluxe master bath, which was never heard of in the '50s and '60s but now today you can -- they're bigger than the living room sometimes. I was looking at a plan just the other day; it was for sale in Florida. The house was 98-foot wide, I should say. The master bedroom was 98-foot wide. It had a her bedroom, a his bedroom, a her bath and it took up 98 feet. That's a little overkill.
RYSSDAL: When you look at a building plan, what do you see? Do you see the house?
PULTE: I see the house finished and in color.
RYSSDAL: Was it always that way for you?
RYSSDAL: Talk about the advantage that gives you in the business.
PULTE: Today the most important thing to most buyers on the outside is maintenance free or as close to maintenance free as you can get. Because they're just tired of working. They don't want to spend their Saturdays and Sundays, like their parents did, fixing up the house. They want to play.
RYSSDAL: The Corner Office today is in Northville, Mich. Mr. Pulte thanks a lot for your time.
PULTE: Thank you for inviting me.
RYSSDAL: For more on Pulte Homes chairman Bill Pulte..check out Marketplace.org. You'll find other Conversations from the Corner Office there, too. This is Marketplace Money from American Public Media.