Talk about setting the bar high for succeeding generations. Back in 1987, Clark Ivory’s father trademarked the phrase “Utah’s Number One Homebuilder,” leaving his son, who took over at the end of 1999, to live up to it. During the 2000s, a long list of dangerous national builders came to town, gunning for the top spot in one of the nation’s biggest home building markets.
“Every once in a while, an MDC or a Horton would increase their specs in the middle of the year, and I’d start to worry,” says Ivory, whose anxiety rose last year when second-place MDC moved to within 16 closings of the top spot in Salt Lake City. “But when the year ends, we’re still the largest builder in Utah. This year we’re running at more than double the size of our next closest competitor.”
What makes Ivory’s achievement something to write home about is that he didn’t manage for short-term growth during the housing boom. Back in 2006, Ivory, then a member of the Salt Lake branch of the San Francisco Federal Reserve Board, traveled to Phoenix and Las Vegas to scout market conditions. He returned with a chilling report about a new kind of ghost town, one with the potential to wipe out local economies.
“In the Phoenix and Las Vegas areas, I am aware of a private company carrying around 700 spec homes and a public builder with about 1,000 spec homes for sale,” he wrote in his report to the Fed. “Generally, my unofficial survey of each community was the same—about 80 percent of all completed homes were vacant, some just sitting.”
He took his warning all the way to the Federal Reserve Board officials in Washington, D.C., who largely turned a deaf ear. They didn’t fully appreciate how important the housing industry is to many Western economies. Ivory got a better reception when he related his experience to his subs and suppliers back home. You better pay off your debts and scale back your business, he told them.
Practicing what he preached, Ivory stopped selling homes to speculators, and he tried to convince his fellow builders to do the same. It was tough advice to heed when fortunes were being made in Salt Lake. CEOs of some national builders were telling their salespeople: If you don’t sell homes to everyone who wants to buy one, someone else will.
Ivory found himself at odds with Kelly Matthews, a long-time Salt Lake City housing analyst. Matthews didn’t think comparisons among Salt Lake City, Phoenix, and Las Vegas housing markets were apt since home prices hadn’t appreciated as rapidly in Salt Lake. “It turned out that [Ivory] was absolutely correct,” says Matthews, who believes Ivory’s actions insulated Salt Lake from some of the steep drops in home prices and construction that plagued other Western markets.
The strategy saved Ivory Homes from financial ruin. It’s a big reason why the company is still around today and starting to enjoy the fruits of a modest upturn in the market. Because it refused to sell houses to investors, Ivory in 2007 and 2008 wasn’t forced to compete with investors in its own subdivisions. Because it paid off its debts over three years, stopped buying land, and attacked its hard costs, the company managed to turn a profit through every year of the recession. Now it’s one of the few builders of any scale left in the market and can take advantage of an opportunity when it presents itself.
“Ivory Homes represents the gold standard for Utah,” says Larry Webb, CEO of The New Home Co. When he ran John Laing Homes, Webb shut down his Salt Lake operation. “Quite simply, they are the most respected builder in the state.”