Click here for the list of the top 50 markets.
Some familiar names are missing from our 2008 list of the top 10 builders in the top 50 markets. Kimball Hill disappeared from the list of the top 10 builders in Portland, Ore.; TOUSA, engaged in bankruptcy proceedings, dropped off the list of the top 10 builders in Jacksonville, Fla.; and Taylor Morley, a perennial powerhouse in St. Louis, disappeared after it shut down operations.
But as attrition winnowed the home building ranks, with more than 75 major builders either going bankrupt or simply closing their doors last year, new companies emerged as local market leaders, thanks to superior operating formulas, a marketing niche that’s right for the times, or just a little good luck. Four builders—Harbour Homes, Camwest Development, Wasatch Management & Development, and Premier Communities—are new to our list of the biggest builders in Seattle. Murray Franklyn, the sixth largest builder there, is betting on Seattle’s continued growth.
In Chicago, Lakewood Homes, which has been offering consulting services to other builders, and American Invsco, which built out a high-rise condo, dropped off the roster of local titans. That made room for Edward R. James Partners and The Belgravia Group, with its strong sales culture, to make the list.
Our Local Leaders list is often used by investment analysts to track the progress of public builders in penetrating and dominating the top markets in the country, since many public companies don’t regularly release their results by local market.
And in that regard, the list demonstrates the dominance of D.R. Horton, the biggest home builder in America last year. The company is the market leader in 10 of the top 50 markets, and in nine of the top 20. D.R. Horton is a firm believer in the benefits that accrue to the top dog—more clout with subs and suppliers, a first look at the best land deals, and strong sales and marketing efficiencies. However, Horton—which as of March 31, 2009, operated in 77 markets in 27 states—has also scaled back in or extricated itself from several metro markets during the downturn, including Denver and Southern California.
As public builders pull out of marginal markets and concentrate on core markets, their ability to finish first grows in importance. Public companies own the No.1 spot in 28 of the 50 markets. The builders with the next-closest number of first place finishes are Pulte and NVR with four, Lennar with three, and KB Home with two.
“‘Market share,” though, is a relative term when so little building is going on in major metros. Greater Phoenix, for example, saw its housing permits fall by 58% from 44,280 in 2006 to 18,533 in 2008, according to Census Bureau estimates, throwing many private builders out of business.
As a result, the market share of the top 10 builders in Phoenix rose from 58.9% to 74.2%. It remains highly concentrated and in the hands of public companies. Shea Homes is the only private company on the list of top 10 builders in Phoenix.
Some markets that had always been wide open have consolidated. In Atlanta, for instance, where the top 10 builders used to command only a 17% market share as recently as 2007, 31% of the activity is now in the hands of the top 10 companies. The leading builder in Atlanta, Legacy Communities, built 1,326 homes, which is a lot for the top builder in this city, a market where big builders have had trouble gaining traction and beefing up.