Industry Insider: Andy Konovodoff, K. Hovnanian Homes

Change is a constant in life. You can lament that fact and be negative for the rest of your life, or you can accept the new normal and move on with your life and your work.

Andy Konovodoff, president of the Chicago division of K. Hovnanian Homes, based in Lombard, is philosophical about the current state of the new home construction business.

“In 2005 when K. Hovnanian entered the Chicago market by buying Town and Country Homes, we built 1,230 homes and were the fifth largest builder in the market. Now we are building 160 units per year and we are the fourth largest builder in the market. That is how things have changed,” Konovodoff said.

“The good news is that about 2,000 people are building new homes in the Chicago area this year. So people are buying homes — not at the furious pace they once were — but they are buying homes and we, at K. Hovnanian, will take part in that and hope that eventually the market ticks up again,” he said.

“Our job is to provide people with shelter so we are determined to build quality homes and stand behind what we build. Eventually, housing will again become a good investment, as long as the government doesn’t remove the tax benefits of homeownership. So this is a great opportunity to buy,” Konovodoff said.

What is your personal dream house?#147;I am a rural guy so I would want to live in Sugar Grove or somewhere west of the rat race in a home that is somewhat contemporary with a blend of exterior finishes, and it would be surrounded by lots of open space for our seven children.#148;What is your favorite amenity?Konovodoff prefers communities that offer clubhouses with swimming pools, as well as walking paths and bicycle trails.What is the best part of being a builder?#147;I love creating a community by taking it from scratch, creating a streetscape and then seeing the families move in. It is a great feeling to drive by some of the older communities we built and know that we took it from a cornfield to a community.#148;His background:Konovodoff is the son of a Russian immigrant who came to the United States in the late 1940s. His father purchased a New Jersey chicken farm and raised chickens. When there was a financial crisis of some sort in the chicken industry in the early 1960s, his father left the business to pursue a career in general contracting. Over the years he learned the various trades, from painting and drywall to electrical and plumbing, enlarging his company year by year.In the late 1970s, his father picked up some large navy contracts, renovating barracks, rebuilding warehouses and replacing old windows on bases like Fort Dix, and Konovodoff worked with him, learning the business from his dad.#147;He had me work with the masons one summer, the electricians another summer and so forth until I learned the business from the guts of the building, out.#148;He then entered a local community college where he earned an associate degree and then moved on to earn his bachelor#146;s degree in business from the University of New Orleans, working as a Russian interpreter on the side to make money.After college Konovodoff went home to New Jersey and worked for his dad for another year, getting paid as an independent contractor without benefits and paying self-employment Social Security, just like the 70 other people who worked for his father. At the time, his father#146;s company had the painting and drywall contract for a huge New Jersey subdivision called #147;Holiday City#148; and they were working on 700 to 800 homes per year. His father was also buying foreclosures in tax lots, fixing them up and then renting them. Konovodoff got experience working on those, too.But when he approached his father about a partnership, the answer was #147;no.#148; The old Russian immigrant told his son to go make his own way in the world so Konovodoff went to work as a superintendent and then a project manager for another large contractor in the area, where he got experience working on everything from strip malls to big box retail stores, homes and even renovations.Konovodoff even owned and managed a Bricktown, N.J. tavern, restaurant and package liquor store with a friend for a few years while he was simultaneously buying, fixing up and then selling or renting homes like his father did.But as his family grew, Konovodoff knew that he had to get serious about his career. So in 1992 he went to work for K. Hovnanian in New Jersey as a supervisor again. Then, in late 1995, at the age of 41, he moved to Illinois and took a job as a superintendent for Town and Country Homes, where he worked his way up the chain of command until he was named division president in 2005, the year before his old employer, K. Hovnanian Homes, decided to expand into Chicago by purchasing Town and Country Homes.What were the most valuable lessons your father taught you?#147;He taught me that if you watch the pennies, the dollars will take care of themselves.#148;And his father also taught him to surround himself with only the best people.#147;I don#146;t run an oligarchy. I value the opinions of the people who work for me and try to reach a consensus. Ultimately, of course, I have to buy in to any decision and sometimes I disagree and don#146;t buy in. That is my job. But I try to make this a fun place to work because, even during tough times, you can#146;t let work become drudgery.#148;The details:In addition to completing sales at six area communities begun when the housing market was strong, K. Hovnanian has acquired five new communities in Mundelein, St. Charles, Glen Ellyn, North Aurora and Bolingbrook.#147;We are choosing to build smaller communities of 50 lots or less because they are more manageable and we can get in and out quickly. And we are being very careful to do thorough research and only buy land in places where people genuinely want to live.#148;Between 1995 and 2005, any land acquisition was good, but that is no longer the case, he said.#147;It is a whole new world now. Lots of research on buying patterns is necessary now and, consequently, we are in the process of acquiring three more real nice pieces, so we expect that we will double our size by the end of this year.#148;Not all of the builder#146;s future communities will be small, however. It depends on the address and the situation. It now has a parcel under contract in Lisle, for instance, that will be broken into 160 lots.Base prices on K. Hovnanian homes in the Chicago market now range from $179,000 to $480,000, depending upon the size, style and location. While homes in Oswego sell in the low 200,000s, those in Glen Ellyn range from $410,000 to $480,000.What are the biggest changes you have witnessed in the business?#147;During the past five or six years, homes have become more efficient and value-oriented with less wood and walls involved in the construction. We are using more engineered wood, too.#147;In addition, the price points have dropped dramatically and our floor plans are calling for more flex space as a new generation of buyer changes the way people live.#148;What are your company#146;s future plans?#147;I can#146;t predict when the market will come back but in the meantime we continue to look for unique opportunities to buy land and grow the Chicago division. I love this business so I would like to see us building 500 to 600 homes per year again within a reasonable amount of time.#148;