NEVADAN AT WORK: Tom McCormick--
President and co-founder, Astoria Homes

Astoria President strives to keep new homes affordable

Tom McCormick is constantly crunching the numbers to keep Las Vegas affordable for entry-level home buyers.

He's using all the financial acumen he acquired in Sacramento, Calif., as a certified public accountant, project coordinator and assistant controller specializing in residential construction.

The solution gets murkier, though, when escalating land costs drive median new home prices to $240,000, well beyond the means of the average Las Vegas service worker.

As co-founder and president of Astoria Homes, McCormick developed the Triumph neighborhood concept, packing more houses onto smaller lots, thereby keeping Astoria's prices 20 percent below the valley's median.

Homes at Astoria's Silverado Place, which opened in early 2002 in the Silverado Ranch area, started in the $110,000 range.

They're long gone, McCormick said.

Now it's $190,000 at Independence at Warm Springs Road and Quarter Horse Drive in the southwest valley, The Peaks within Coronado Ranch and Tapestry around Centennial Hills in the northwest.

Astoria prides itself on bringing a new sense of lifestyle to people who are able to own a home in an inviting and quaint environment, McCormick said. The neighborhoods have their own park, pool and playground.

"We develop our communities in growing, newer areas where home buyers typically would have a difficult time finding entry-level homes," he said.

McCormick came to Las Vegas in 1992 as vice president of finance for Pageantry Homes and started Astoria Homes with Joel Laub in 1995. The company grew from 35 closings in its first year of business to 780 last year, No. 10 in the valley and one of only two private home builders on that list.

Astoria has been honored with more than a dozen awards from the Southern Nevada Home Builders Association, including "Home of the Year" in 1997, and McCormick was featured as a "Mover and Shaker" in Professional Builder Magazine in April 2002.

Question: A lot of private home builders in Las Vegas have been swallowed up in mergers over the years. How has Astoria survived and why do you remain private?

Answer: We've been approached about being purchased. We want to remain private because it gives us additional flexibility. The only way we can compete is by beating the public companies at their own game. We don't get any breaks in costs for materials and supplies and labor, like the publics. We just stood by one thing: the most for your money. We've had to grow a lot bigger than we originally expected. That's been good. It enabled us to give opportunities to people in the company and helped us attract the talent we need.

Question: Builder Magazine featured Astoria as the third-fastest growing home builder in the country in 1999 when you went from 279 home closings to 421. Can you sustain that kind of growth?

Answer: We don't plan to grow like that. Our growth will be slow. It's impractical to assume you're going to grow bigger and bigger with all the public companies and the cost of land. We'll be over 1,000 (homes) this year and around 1,200 next year. We've always planned for growth before it happens. We sit down and decide where we want to go and how to make it happen. We have the property and the people for the next three years.

Question: What are some of the most significant changes you've seen in the Las Vegas housing industry?

Answer: Most significant is the price of land. When we started, we were buying property in good parts of town for $70,000 an acre, $80,000 in Silverado Ranch and up in Centennial Hills until a couple of years back. To replace that property now would cost $500,000 to $700,000 an acre. That's our big challenge in competing with the publics. They have the deep pockets. The high wire is a lot higher than it used to be. Our investment is at $600,000 ... the risk is a lot higher for us and our investors.

Densities have certainly gone higher. We kind of pioneered that trend with Silverado Place, detached homes built at 15 homes per acre. Our lots are under 1,600 square feet. It takes very creative land planning and community planning. That is in response to increasing prices.

The new thing we're doing is three-story homes (at Tapestry). The most expensive part of building a home is the land, so a three-story home is in response to the fact that land has gotten so expensive, families that need a three- or four-bedroom home have been priced out of the market.

Question: You've said your goal is to provide the "American Dream" to entry-level home buyers. How do you do that? What is entry level?

Answer: Part of it is higher density. The way I look at it, entry-level shouldn't be relegated to the weakest part of town. Entry-level doesn't mean you go cheap, but you get a high-quality home on a smaller lot in a good part of town. We look at entry-level different than other people. Anything that appeals to the first-time home buyer, typically the lowest price in the area you're in. It's always regional.

We work with the subcontractors early on to keep prices as low as we can.

Once you put a down payment on a home, a lot of times you don't have anything left, so we include a washer and dryer, a refrigerator, microwave, finished landscaping.

Question: You received a merit award for "Most Affordable Project in the Western Region" at the Premier Building Show in San Francisco. What was that about?

Answer: Silverado Place. That neighborhood was built about 40 percent below the median price. That included the 100 percent home program (appliances, landscaping). We just closed on our last home there.

Question: What's your business philosophy?

Answer: It's more for your money. That's our goal. That's where the 100 percent home program came from. Where EnergyStar came from. Oversized kitchens, landscaping. If you've seen our parks, the common areas we built including pools, basketball courts, picnic areas -- the way we look at it is over time we've become more efficient and we can take that efficiency and add more content in a home without raising our price over competitors.

Question: What is your proudest accomplishment?

Answer: Triumph. Easily. Some day when I look back on my life, I'm going to look back at what I've been a part of. If it wasn't for Triumph, most of these people couldn't own a home, certainly not of that quality. I feel I'm making a contribution to the local community. When Dennis Smith (of Home Builders Research) stood at the podium at his Housing Outlook and said there are no homes under $100,000, we had homes under $100,000 and those homes have appreciated significantly and those people have done very well.

Question: What about your biggest mistake?

Answer: Our biggest mistake were the first two neighborhoods. They didn't go over well at all. We had to develop a brand new product of new homes. They were too unique. If you loved them, there was nothing like them. Unfortunately, too few people loved them. It made us go back and re-evaluate everything we did, including what we're good at. We changed everything, even our logo.

Question: What's ahead for the Las Vegas housing market?

Answer: What I see is increasing prices, albeit at a slower rate than we've seen recently, and decreasing affordability. This land issue is getting to be a big problem. You can trace this back to the government's reluctance to release more land.