View from the Top
Not all the results from the Builder 100 are in, but it’s already clear which companies will land in the top 10. D.R. Horton retained its title as the biggest builder in America, closing 37,717 homes, a 29 percent decline from the previous year. While the other members of the top 10 did not change, their places on the Builder 100 did.
The big unanswered question is whether the combined market share of the industry’s 100 biggest companies will drop because of their exposure to some of the hardest hit markets last year. If the record of the top 10 builders is any guide, that may happen. Last year’s list showed that the top 10 builders accounted for 25.71 percent of housing sales, up from 20.97 percent in 2005.
This time around, the industry’s biggest players took it on the chin in formerly hot markets such as California and Florida, which have been off the most in the last year. To work off land inventory, many of them continued to produce spec housing in 2006 and into the spring of 2007, when they put on the brakes for the most part. This deceleration may translate into lost market share in the short term, though industry experts say the largest home builders will gain share coming out of the downturn.
We’re starting to see some changes in the executive suites as the housing downturn continues. CEO Steve Scarborough’s surprise retirement from Standard-Pacific is the most recent example. Scarborough was replaced by Jeffrey V. Peterson, the lead independent director of the company's board of directors. Peterson, who has served on the board for seven years, will be chairman, CEO, and president of the Irvine, Calif.-based public builder.
Sheryl Palmer recently was named CEO of Taylor Morrison Homes, a company formed by the merger in July of Taylor Woodrow and Morrison Homes. Palmer, the highest ranking female CEO in the home building industry, is taking over a merged company that, in aggregate, closed 7,247 homes in 2006 and generated $3.573 billion, which would have made it the 15th-largest builder in the country that year.
McCar Homes, No. 39 on last year’s Builder 100, last year appointed Steve Roberts as the new CEO of the Atlanta-based company. Once only an Atlanta-area builder, McCar expanded organically into the Carolinas and Florida over the last seven years. The move allowed the company to grow closings to 2,265 in 2006, with 60 percent of those coming from outside Atlanta.
Larry Burrows, the former CEO of Winchester Homes, was recently named president and CEO of Weyerhaeuser Real Estate Co., a post that opened when Dan Fulton was elevated to president of Weyerhaeuser Co. in December. Burrows effectively repositioned Winchester, Weyerhaeuser’s Washington, D.C. operation, as an upscale brand during his tenure there, along with implementing strong quality and customer satisfaction programs. Burrows will now oversee Weyerhaeuser’s six home building companies--Camberley Homes, Maracay Homes, Pardee Homes, Quadrant Homes, Trendmaker Homes, and Winchester Homes.
What’s Next for the Fed
Ever since several home builder CEOs visited with Federal Reserve Board Chairman Ben Bernanke last year, the Fed has taken a series of actions designed to ease the housing downturn, dropping the Federal Funds rate from 5.25 percent in September to 2.25 percent as of March 18.
Michael Moscow, former chairman of the Federal Reserve Board of Chicago, will be speaking at the Builder 100 conference about these moves, their impact on the housing market, and any future actions the Fed might take. To see the complete agenda and sign up for the conference, please visit www.builder100.com/.
Learn more about markets featured in this article: Phoenix, AZ.