LISA BALL
Lisa Ball became vice president of Ball Homes in 1982. She and her brother, Mike, co-own and operate the homebuilding company that has been active in Central Kentucky since 1959 and in Louisville and Knoxville, Tennessee for more than two decades. The duo also co-own and manage RML Construction, a property management company with apartments and rental properties in Central Kentucky, Louisville and Knoxville. She co-manages all aspects of the homebuilding business founded by her parents, Don and Mira Ball, and also works with Christie’s International Real Estate Blue Grass, an affiliated real estate agency, and Walden Mortgage, an affiliated mortgage company. Ball is a board member of the Building Industry Association of Central Kentucky, where she has twice been president. She has also been president of the Lexington Apartment Association, served two terms on the LFUCG Affordable Housing Governing Board, and been a board member with the Hope Center Foundation, Equestrian Events Inc., the Kentucky Horse Park Commission and Sayre School in Lexington.
Mark Green: How many single and multifamily residences does Ball build and sell annually?
Lisa Ball: Multifamily changes every year, so that’s hard to answer. Last year we had 552 single-family homes but this year we were at 395 through the end of June. We are building in Tennessee and in Fayette County, off Blackford Parkway and Man O’ War. We’ve had more units come on in Tennessee than we have here in Fayette County.
MG: Where are your active construction areas nowadays?
LB: Louisville, Knoxville, Lexington, Georgetown, Versailles, Nicholasville, all around central Kentucky.
MG: How much does annual volume vary?
LG: It stays fairly steady. We are at 500 to 600, 650. The annual total is going to fluctuate based on the land and lots we have available, where we have large developments that complete their plan and how far along they are in the process.
MG: What factors affect that volume? Is it available workers, financing, land, materials? Everything?
LB: All of it. Land is probably key because that drives our market. If you have the best location, you’re going to have stronger sales in that area. When we opened in Chilesburg (Lexington), demand was strong and our sales picked up. When you have something like that, you see that surge in volume.
MG: Have you tracked how many homes Ball Homes has built over the years?
LB: No, no, no! It would go back 60-plus years. We have the warranty files for every house from the beginning of time but I would not dare go back and try to count them.
MG: You are a private company. Do you share information about financial performance?
LB: I’ll just say it’s been steady. We have a great group of employees who help us keep our performance good and steady.
MG: How many employees does Ball have?
LB: In total around 250.
MG: What functions are internal and which are external?
LB: Most of what you see in the construction field, from drywall to framing to pouring concrete, that’s all subcontracted out. Everything else is internal (employee functions).
MG: When someone buys a Ball Home, how long has that house been in the works?
LB: It can be from three to five years, but sometimes planning on land purchases can go out 10 years. For instance, land that is newly coming into the (Lexington-Fayette Urban Services Boundary) expansion area, land that we may have under contract (to buy) or an option on (to buy) in that area, it’ll probably take five years before the property is ready to be built on. There’s land we’ve had on our radar for quite a few years, hoping something might come about. Sometimes it’s longer than that.
From the time a buyer comes in, it can be anywhere from six to 12 months, depending upon customization. To get houses out of the ground and into development, that process takes quite a bit of time from start to finish.
MG: There is high interest in the economic development community about housing because if the state and communities are going to hit goals for growth and new jobs, workers must have somewhere to live and more housing has to be in the pipeline. Where is Ball Homes’ current focus in meeting housing demand?
LB: That’s difficult to answer because as the market shifts, we have to be ready to shift with it. Between interest rate changes and the affordability of housing and what people are looking for, you have to be able to adjust. As it comes to trying to have product available, we’re up against a lot of things, especially in Fayette County and the surrounding counties. The demand pressure goes out past Fayette County because of the (Urban Services) growth boundary. It has caused pricing to be higher everywhere, and we constantly are trying to keep it under control.
MG: It sounds like the focus primarily is on getting land to build homes?
LB: That is a big priority, but the main priority is trying to figure out how to make it as economical as possible for the buyer. We do everything we can to keep the product as affordable as possible. There are a lot of hurdles that keep that from happening.
MG: We hear there is very little land for building in Louisville and Lexington. How do you characterize it?
LB: We’ve been in this drought in Fayette County longer than a lot of other areas of the country. In Tennessee, it’s a lot easier to find land for development than in Fayette County. There are still some good opportunities for land that is good for housing or business in Fayette County and it’s important for our community to be able to have growth to continue to prosper. We’re losing affordability. Residents are finding it difficult to live in the homes they’ve had for years or live downtown, and they are forced out. We are putting pressure into downtown for all those homes to be redone and people are being dislocated. We’re losing rental properties because all of a sudden, they’re worth more money and so they’re redoing. It’s a sad situation for a lot of people. It’s great in some ways for the economy, but it’s sad for those who are displaced.
MG: Where are the best locations to build now? Rather than Fayette or Jefferson County, is it one county out, two counties out?
LB: We’ve been one county out around Fayette County for a long time; same thing in Louisville. Near Knoxville, counties are larger there. There is a demand to spread out farther, but people still want to be near good services, groceries, restaurants.
MG: High-rise housing developments are going on around the country. Are we likely to see that trend here?
LB: I see it even in Knoxville, but not as much here. It’s expensive to do and it’s probably not going to solve the affordability issue. It does help on the land issue. Most buyers we see today want to have a little bit of a yard and a little bit of land. It’s very hard to get away from that. And the highest majority want to have that bedroom on the first floor. No matter what their age is, they’re always thinking, “I’m going to age in place here.” They want that.
MG: Material costs vary in cycles. If an opportunity comes up with wood or cement, does Ball act to get a supply to stash away or can you not really do that?
LB: We can’t. It’s not feasible as far as knowing what and when you’re going to need it and having a place to store it. Most products, if they go up, they don’t come back down. Lumber is one that does fluctuate. But labor, for instance, went up in 2020 during the COVID year and has not come back down.
MG: Are housing material supply lines functioning adequately now?
LB: They’re functioning well. Sometimes something will pop up that we’re have problems with, but it’s rare. There’s normally a backup. During COVID, we stopped early on. Prices were shooting up and we couldn’t get the supplies. If we had been obligated to build, it would have been difficult.
MG: Are housing materials or construction processes changing?
LB: There’s new technology all the time, but things are pretty much what you’re used to seeing. There are some new things on the lumber side. Pre-made concrete walls are out there and available. It will try to push its way in but the price is just a little prohibitive. It is always hard for that type of thing to get over the hump. We’re not going to see 3D-printed houses. They have some of that in Texas and hopefully at some point there will be some here, but it’s still too much of an outlier and therefore way expensive beyond traditional methods.
I would be remiss if I didn’t talk about labor because that is the bigger battle. We don’t have industrial arts and those things in high school. There is a whole segment of our youth who need to be doing things with their hands and not be on the computer. They come out of school thinking that their only option is to go to college. But the building industry association has a building institute that offers instruction in plumbing, HVAC and electrical. It is a great program that has been effective in helping get more labor into the workforce, but that is a shortage that continues to be difficult.
MG: After the financial crisis in 2008-2009, which was housing related, companies and workers left the field and for five years there was no demand and fewer workers came in. What about home builders themselves? Are there enough builders nowadays?
LB: A lot of the home builders at that time went into remodeling and quite a few have stayed in that field because it has been a strong market. It’s difficult for a home builder today. It’s hard to find the lots to build on. We used to develop and sell lots that were not in our neighborhoods. There’s just too little land available to do that on in Fayette County. Are there enough builders? No, but there are enough for what (land) we have available. It’s supply and demand. If they can get into it, they will. A lot of the remodelers will start building when that time comes if they’re still working.
MG: Kentucky and most areas of the U.S. need more housing and especially affordable housing. Does Ball Homes have a strategy to approach this?
LB: Let me ask first: What do you classify as affordable housing? There’s housing affordability. There’s affordable housing. How do we classify low income? There is workforce housing, and attainable housing.
MG: Does Ball have a way to define affordable housing?
LB: I served for a while on the (Lexington-Fayette) affordable housing task force. I was on the Affordable Housing Governing Board. They’re making great strides in keeping units affordable—rental units, which we are losing quickly in Fayette County. But that board is doing a lot to keep them in service (with) city money. What Rick McQuady (director of the Office of Affordable Housing) has been able to do with that money has helped to keep units affordable and in service. It’s important the city do that, but when you look at area median income, it’s hard for someone at a lower income level to even be able to find a rental unit.
Then it comes to being able to build an affordable unit. There was work done by a nonprofit group in town to figure out how to build affordable units on lots they already owned and how much subsidy they needed to make them affordable. They had someone bid out the units. To make them affordable so that low-income residents could get it into them and still meet their living needs, the subsidy would have to be $100,000 each. You can’t build it (affordably) anymore, which is sad.
MG: Workforce housing is a new term. Is that an alternative goal?
LB: The definition varies, but that is housing prices that are attainable for 80% of the area median income. Area median income in Fayette County is $76,000. But the problem is trying to find housing that hits that income level. That is very, very difficult.
Ball Homes now has a new product called our Trend Collection. These are homes that are economical but have great floor plans, wonderful style. They’re good size and we have curated them with the desired options and upgrades people want the most. They have granite countertops and other good things available, but they don’t have a ton of other options. They can’t customize other things. It’s pretty much one package, and this is what you can do to upgrade a few things. That helps us be able to build them quickly to get them in at a more affordable price.
We have done this to hit a marketplace when housing has become so expensive, which has happened with a lot of builders and a lot of markets. It has been very well received, and it’s a lot of what we do today trying to hit that (affordable) market.
MG: What is in demand right now? Is there such a thing as a starter home nowadays?
LB: A starter home—there’s really not. The Trend Collection would probably be considered a starter home—1,699 square feet is probably the smallest. They’re all at least three bedrooms, two baths—some two and a half—and a two-car garage. The starter home back in the day was three bedrooms, one bath, no garage, 1,100 square feet.
MG: Why is that is not being built now?
LB: Nobody wants to buy that. But also, the land is too expensive to be able to put that size home on it. Land costs today are prohibitive on being able to sell it effectively.
MG: Land cost is an affordable housing issue. People moving from rural to urban areas is a global trend that makes urban land more expensive, and a small house on expensive property is still expensive. Is there a program, policy or incentive that would make it financially viable for builders to develop affordable housing?
LB: There are tax credits for multifamily housing, for affordable rental units. Years ago, there were federal financing programs, similar to qualifying for the FHA program, under which your mortgage payment was adjusted with your income. You qualified by a lower income guideline; your income was looked at yearly and the payment adjusted as your income went up. It was adjustable over a long period of time, so it adjusted slowly; it wasn’t like an adjustable-rate mortgage—I know why people are scared of those today.
It was a great program to get into a home and see that American Dream. It was done in the ’70s and early ’80s and subdivisions were built based on those loans. But what they were buying was that three-bedroom, one-bath entry-level house. That new home doesn’t exist now; it could be a resale product that would spur people to be able to get into home. But there’s still not enough of that type of home available.
I think the federal governments pushed more of their resources down to the state level for them to do those things, but I don’t know that the states have the ability individually to do enough. Kentucky housing has some really good programs. A lot of them are through FHA loans on the federal level, so they can cut rates but a lot of times it’s very specialized.
MG: Housing prices are at record highs, mortgage rates are above the historic lows we had in the 2010s, and this is cutting into sales. With economists expecting interest and mortgage rates will drop this fall, does Ball expect this to increase sales?
LB: Maybe. I don’t think people are not buying because the sales prices are higher; they don’t want to lose the rate they currently have on their home. People are driven to buy right now out of need and necessity: a job transfer, maybe it’s the first home, they’re moving to a new area, or they’re outgrowing their house and just have to move.
If mortgage rates tick up a little, there are people sitting on the fence who think they better go ahead and buy. And if it goes down, that also makes people jump off the fence. If it goes too far, then they back off and wait for it to drop again.
Rates have stabilized from that crazy run up in 2022. I’ve never seen it increase that far, that fast. We went from 3% mortgage rates to 7-8% over the period of seven months. That caused people to step back, but it wasn’t a very long step back; it was less than I expected. That was over a summer and then into the fall, which is always a slower time. Then after the first of the year people were back into the marketplace.
It is really hard to predict. They kept saying this year that the rates were going to drop and they haven’t yet, and I still question whether they will.
MG: Does the economic development community interact with the major home builders to talk about filling and meeting housing needs?
LB: In the last 10 years there’s been a strong shift in understanding we have a major shortage of housing and that without the housing, it’s going to hurt their ability to bring in new jobs. The building industry association, the chambers of commerce, all those groups have been working very closely to support each other and that has made a difference. We have made some strides in getting more land. It’s been an effort of education from all segments of the business community and that’s what it took.
MG: Which metrics or elements of the housing market do you watch most closely to recalibrate where you are and what you need to be doing?
LB: I listen to my sales team and especially to (Ball partner) Christie’s International Real Estate Bluegrass here. Having a full-service real estate company here helps to keep tabs on the market in totality, which is important. I read the New York Times; it is my best source of general news. But boots on the ground tells me an awful lot.
