John McManus Photo: Katherine Lambert

To hear Larry Webb talk about private home builders, you'd almost think he uses the term as a way to describe a personality type, and you wouldn't be far wrong.

Webb, who's working on getting his own venture, The New Home Co., up and running in California, says of his fellow private builders: “When times are really bad, we think they're never ever going to be good again. And when they're going good, we think they can't ever get bad.”

Fewer than 20 publicly traded home building enterprises operate in the United States, but in a housing economy that overcorrected dramatically to below-normal demand for new homes, it's those 15 to 20 firms with access to public equity and debt markets who can eat up a greater share of the shrunken market. When—not if—demand normalizes to 900,000 or a million starts a year up from barely half of that, the publics' dominance may recede. Private companies will find niches; those niches will grow; and before too long, privates will go toe-to-toe again in high-demand markets with the publics. That's the way the story seems to go when a housing cycle restores equilibrium, temporarily.

It takes a rare strength of character to deal with a business cycle that works the way home building and real estate does, at least that's what you'd infer from people who talk about the difference between private and public home building.

Webb says, “In how many other businesses, do people still put their own name on the company?” It might come across as ego, and there's probably some of that, but every local and regional home builder knows it's more.

When Carl Mulac, an upstart we profile starting on page 40, says, “I am a home builder,” he says it with reverence and regard to a culture and class of business-people who behave and believe a shade or two differently than those who ply their trade in other professions. It's said with pride, passion, humility, defiance, a sense of comic irony, but never with regret or remorse.

A delicate balance underpins the truism that all real estate is local. Start with the relationships a businessperson has with land sellers, which in many ways continues to be the black box of success or failure for builders. Continue with the reputation with people who buy homes; the management staff; the trades; and the lenders who finance the projects, the land, and the horizontal development.

When credibility and trust serve their normal level of importance in each of those interactions, private home builders thrive. When euphoria or panic diminishes that role; when people fantasize that they can get “something for nothing;” or when institutions press “delete” on their institutional memory—that's when the privates have a hard time, which is now.

Here is what BIG BUILDER editor Sarah Yaussi says about the current plight: “As much as private builder executives are business managers, many of them are also business owners who've poured their hearts, souls, and savings into growing their business in the best of times and keeping them alive in the worst of times—of which the past three years most definitely qualify.”

BIG BUILDER senior editor Teresa Burney captures quintessential private builder David Weekley's thoughts on how he adapts to doing business in a cyclical industry: “I think what happens to anyone who goes through these very severe contractions, when they have layoffs and impairments and you go through all the distress, I think these things kind of scar you, mark you, mold your thinking for what's the smart way to do business.”