THESE MARKETS ARE HOT, BUT for all the wrong reasons. With 2006 looming on the not-too-distant horizon, much of the talk among high-ranking home building executives is less about Atlanta, Tucson, or even San Diego, and more about the coastal states of Alabama, Louisiana, and Mississippi.

The nation begins to take real stock of the human toll and material damage; and the government begins talk of hundreds of billions of dollars to rebuild the stricken city of New Orleans; and hundreds of thousand of people from the region Katrina swept through on August 29 keep awakening each day as if from a bad dream on cots, mats, floors, and borrowed beds, in shelters, arenas, motels, at friends', at relatives', and at Samaritans' places miles or hundreds of miles from what was home.

Most big builders are focused, as is much of American business and society, on being the best corporate citizens they can be, sending money, food, whatever emergency resources the crisis and its painful aftermath calls for next. In spite of the still emerging need to replace as many as 400,000 homes in the devastated Gulf Coast area, big builders today hardly know where or if they, or their $200 billion business empires, or their home products, or their land planning expertise, or their financial services offerings fit in to President George W. Bush's massive reconstruction push. It's only in neighboring states like Texas, Florida, Georgia, Arizona, and Arkansas that the nation's leading builders appear to be part of the healing and recovery.

Although the situation remains fluid, leaders of the nation's largest home building firms are, in some ways, already in action—contemplating initiatives, both strategic and charitable, that address the damage and fallout as a result of the storm, and identifying key issues that are likely to affect the business of building homes—for the good and bad.

TOO EARLY TO TELL What they are not doing at this stage of recovery, however, is pushing toward immediate new initiatives in the affected states. Most say it's far too early to assess any specific opportunistic investments that the devastation may provide.

  • “At this point, it's too early to tell what impact this event will have on housing in the affected areas,” says Gayle Goodman in the public relations department at Centex Corp. “However, we will be looking to organizations like Habitat for Humanity and Home-Aid for their help in recommending the appropriate courses of action going forward. These organizations usually determine the needs and then come to us and other big builders for the appropriate resources.”
  • “Is there any appeal for us? Not in New Orleans,” says David Hill, CEO of Kimball Hill Homes. “We'll see what evolves in the other areas.”
  • “There were reasons why we didn't go into those areas in the first place,” says Shannon Farrell, a spokeswoman for D.R. Horton. “We couldn't get the large tracts of land and a lot of the new construction was build-on-your-lot custom. It's still too early to tell if it will be an appealing market for us going forward.”
  • LONESTAR SHINING What many are beginning to surmise is that the Gulf coast's loss may become the Texas housing market's gain. Texas officials estimate about 100,000 Louisiana residents are staying in hotels and motels across the state and another 139,000 are being housed in 137 shelters. Countless others are residing with friends and family. What's more, arriving alongside the population influx are jobs. Shipping business once bound for Louisiana ports has begun altering course into Houston environs harbors. Oil and energy businesses have quickly relocated operations, and support industries, such as law and accounting, may follow on their heels. The Dallas mayor's office confirms that it too is working with a number of displaced businesses.

    “I have been concerned that we were getting overbuilt in Houston and San Antonio,” says strategic analyst and researcher John Burns of John Burns Consulting. “This [hurricane] is likely to solve that problem overnight.

    I imagine Dallas, Houston and San Antonio will see a long-term-to-permanent surge in their population.” And that's a sentiment widely shared by builders already active in Texas markets.

    “I think this event will just add to the already strong Texas markets,” conjectures David Hill, who has already seen sales of Kimball Hill Homes in the Houston area. “We started picking up Louisiana traffic and qualifying them at our sales offices over the weekend [of September 3 and 4]. I know of at least two homes, and if it's just a week after the world begins to sort itself out, you can bet that there is going to be a significant bulge in demand,” says Hill. “People are looking for a whole new life and an awful lot of them are going to be finding it in Texas.”

    In fact, less than a week after the hurricane hit, many builders in Houston were already experiencing sales traffic from displaced residents. “We are definitely seeing Louisiana people coming into our communities,” confirms Mickey Pizzatola, president of the South Texas region of Meritage, who heard of at least 13 potential buyers in sales centers during the weekend of September 3 and 4. Trophy Homes, the affordable brand of Technical Olympic USA, has seen at least 10 displaced house-hunters, and Choice Homes has reported several as well.

    Learn more about markets featured in this article: New Orleans, LA, Houston, TX.