Talk about a transitional year. As housing starts dropped, new-home sales dried up, and mortgage money essentially disappeared for much of the market in 2008, longtime private home building companies went from struggling for survival to filing for bankruptcy and too frequently, shutting their doors in recent months.
Such turmoil is illustrated by the BUILDER 100’s list of the top 10 private builders in the country. Glance over the list below, and you will recognize all the names—but you will also quickly realize who is missing. Kimball Hill, the country’s fourth-largest private builder in 2007 with more than 3,200 closings, is liquidating after overbuying on land. C.P. Morgan, which made last year’s top 10 private builder list, closed its doors earlier this year.
Other big private firms are still operating, but are certainly under financial stress. Pasquinelli delivered more than 1,900 homes in 2008, but it put its home building operations on ice earlier this year while it attempts to renegotiate with its lenders. (Pasquinelli continues to sell homes in many communities.) Woodside Homes, which closed more than 2,000 homes in 2008 to be the fifth-largest private builder in the country, is currently restructuring and operating under Chapter 11 bankruptcy.
Overall, Habitat for Humanity captured the top private builder spot, delivering just a few hundred fewer homes to sweat-equity-investing homeowners at 5,400 closings than it did in 2007. Then Shea Homes and David Weekley Homes traded places from last year's rankings, with Shea grabbing second-place and Weekley a very close third among the private builders, with 3,225 closings and 3,213 closings, respectively. The two will likely remain competitive in 2009 as well as each company focuses on the basics: sales, profitability, and cash flow, according to their BUILDER 100 survey responses.
Shea and Weekley aren’t alone in their corporate emphasis on operations and financials. Reducing inventory, value-engineering homes, and improving efficiency on the home building side qualified as priorities for many of these large private home building firms.
Will such strategies be enough for big private builders to survive this housing recession? We’ll have to wait for next year’s list to find out.
Alison Rice is senior editor, online, at BUILDER magazine.
Top 10 Private Builders in 2008
1. Habitat for Humanity (#11)*: 5,459 closings, $1.481 billion in revenue
2. Shea Homes (#16): 3,225 closings, $1.4 billion in revenue
3. David Weekley Homes (#17): 3,213 closings, $982 million in revenue
4. The Villages of Lake-Sumter (#19): 2,238 closings, $696 million in revenue
5. Woodside Homes (#20): 2,072 closings, $655 million in revenue
6. Perry Homes (#22): 1,992 closings, $569 million in revenue
7. Highland Homes (#23): 1,944 closings, $678 million in revenue
8. Pasquinelli (#24): 1,926 closings, N/A
9. The Drees Co. (#25): 1,762 closings, $628 million in revenue
10. MHI (#26): 1,675 closings, $420 million in revenue
* Parentheses refers to company’s rank on overall BUILDER 100 list.
Source: BUILDER 100