On June 1, Palo Duro Homes went live as a new-home builder. But the Albuquerque, N.M.–based company has actually been around for a generation under a different name, Artistic Homes. Jerry Wade, Artistic’s 71-year-old patriarch and founder, is transferring ownership of the company to his 41-year-old son Tom to take advantage of estate-planning opportunities in a down market that has caused asset valuations to shrink.
However, anyone who has met the elder Wade knows he isn’t the retiring type. He will remain “totally involved” in the new company, says Tom, who spoke with Builder on Tuesday. “I’m looking forward to working with my dad for the next 20 years.”
Tom, who joined Artistic Homes in 1992, says he’s been running Artistic’s day-to-day operations “for a while.” The changeover in ownership represents the latest transformation of a company that started out in 1986 building starter homes. A dozen years later, Artistic began dabbling in energy-efficient construction, and by 2007 “we started to look at green building and indoor air quality,” says Tom, to the point where many customers stopped thinking of Artistic as a production builder.
In 2009, the builder completed its first net-zero energy house.
Artistic still has about 15 homes to complete under its banner. But Tom says the company has gone about as far as it can with building science and indoor air quality. So Palo Duro (which is Spanish for “hard wood”), while not walking away from energy efficiency, will place greater emphasis in its house plans on universal design.
The new company, which expects to complete between 60 and 70 homes this year, is also rethinking where it will build in the future. Albuquerque, says Tom, has become “incredibly competitive,” and any new lots that come onto the market are being gobbled up quickly, mostly by nationals such as KB Home, which recently has come back into the area. On top of that, the number of permits being issued in that metro has been shrinking, from 1,400 last year to a projected 1,100 in 2011.
Consequently, Palo Duro Homes will focus on “out of town markets” in New Mexico and Colorado, where lot design requirements aren’t as rigid as they are in larger cities. Right now, the company is building as far as 600 miles from its headquarters, and Tom sees expansion into Arizona as a possibility.
Since 2008, Artistic’s homes have gotten bigger, from less than 1,800 square feet that year to between 1,900 and 2,100 square feet for the homes that Palo Duro now builds. Over that period the selling price of Artistic’s homes increased by more than $20,000 per house. Tom hopes that trend can be sustained under his new brand. “Our company has been pushing zero net energy and indoor air quality, and now we’re going to try to capitalize on the value of what we’re building.”
Tom acknowledges that he has some big shoes to fill. “My father comes from a generation of builders that was entrepreneurial and creative, and that’s hard [for them] to give up.” But he doesn’t expect there to be much friction because his father will still be “right in the middle” of helping the company map out its direction. Tom says he’s not threatened because “you always want to bet on a winning horse.”
John Caulfield is senior editor for Builder magazine.