Kevin Eganis president and COO of Lewisville, Texas–based American Legend Homes, which closed 234 homes in 2010.
I’m not sure our strategy would change much from what we’ve already implemented in 2011, since our plan is based on the assumption that existing sales will continue to rise. In 2010, American Legend Homes increased its closings by a 28 percent increase over 2009 and achieved record profits. This success has afforded us the opportunity to contract for a number of new lot positions as other builders continue to struggle with less-desirable communities. We have six new subdivisions scheduled to open over the next six to nine months. Within the last year, we’ve also kicked off our Belclaire Homes brand, a custom home building company focused on sales from $600,000 to over $1 million. A number of custom builders closed their operations over the last few years, leaving a void in this price point. And as the market improved, we saw a real opportunity to capture a significant part of this market.
Not everybody was wiped out by this economy, and there’s quite a bit of pent-up demand out there. In this market, customers have been biding their time to buy property at the bottom. Here’s our suggestion for a low-cost strategy: 1) It is time to approach people who were in your pipeline at the collapse and ask if they are ready to build. Your market needs to know that you survived. 2) Let all of your contacts know that the time to build is now while costs are low. This includes contacts that are family, friends, and associates. 3) Develop a symbiotic relationship with a supplier in whose product you believe and who believes in you, preferably something that will differentiate you in the market. You will drive business to them, and they will drive business to you. But I would not spend big money on marketing yet. The recovery will be long, slow, and steady. That’s actually healthy in the long run.
If by fall we see noticeable improvement in the housing activity in North Carolina, we would probably continue our current focus, which is on acquiring new communities with pricing and terms that are favorable, and focusing on locations that appeal to the broader market. My suspicion is that every builder will want to gain market share by acquiring new communities, and since no new developments are being built, that would result in all of the current players in the market going after the same deals. Our strategy would probably involve bringing in a land manager to be sure we are reviewing the opportunities that everyone else is looking at. It would not change our strategy on what to buy, but certainly if we had one person dedicated to shopping for those deals 24/7, I would expect us to be able to add to our lot portfolio in good selling locations.