Jim Prewitt and Tim O’Brien expect energy efficiency to drive buyer demand in, respectively, North Carolina and Wisconsin. Eric Dille is banking on Denver’s housing market to bounce back sooner and stronger than other Western metros. Partners Len Tylka and Dave Armstrong are seeking investors to manufacture hurricane-resistant homes in Orlando, Fla. And Josh Doyle believes his one-on-one relationship with customers will be the key to success for his year-old business in Toledo, Ohio.
Whether they are seeking redemption after being humbled—or spit out—by the current recession, or think they have something genuinely new to offer jaded and reluctant shoppers, startup builders such as these are filling the void created by so many failed builders having exited the playing field. How many more startup builders are preparing to get going is difficult to gauge, although there doesn’t seem to be any shortage of former owners and officers of regional and national production builders who are rebooting or thinking about it, some more openly than others.
“People are sensing opportunities,” observes Michael Maples, a principal of Danville, Calif.–based Trumark Homes, which launched a year ago and in August started building models for its first project, a 39-home community in Upland, Calif., called Wyeth Cove. “It’s less competitive than it was, and banks are starting to lend again.”
Trumark Homes is part of Trumark Cos., an established developer that is looking for and providing lots to the home building community, focusing on markets where there’s a dearth of new neighborhoods. Besides Upland, Trumark has negotiated bank and private-equity financing for a 5.5-acre parcel it is buying from the city of Brea, Calif., where it plans to build 60 single-family detached homes ranging from 1,200 to 2,200 square feet; and another parcel in Orange County where it will build 68 detached homes. Trumark is also in due diligence phases on two parcels in Northern California.
The company projects 60 closings next year, between 150 and 200 in 2011, and between 300 and 400 in 2012. It’s marketing its products with the tagline “Creating New Traditions,” which Maples explains is shorthand for “helping customers turn a house into a home.” So, for example, gift baskets for new owners might include supplies for their first dinner party along with paint touchup kits.
Predicting growth in a bad economy is something less than science, as Jim Prewitt discovered after starting Prewitt Custom Homes in New Hill, N.C., in December 2007. Prewitt thought his company would close 10 homes in 2008; by July 14, 2009, it had sold only three and expects to sell only two more through the remainder of this year.