Most builders were happy simply to escape 2009 alive after their industry’s production and sales last year sank to levels that haven’t been seen since the early 1940s. The largest companies suffered along with their smaller competitors, as our annual Builder 100 survey all too vividly attests. Many builders are still just hanging on, and profitability continues to be elusive. But some builders successfully probed their markets for growth opportunities and positioned themselves to exploit business conditions as they improve.
The Olson Co. is a perfect example. While its closings and revenue slumped again last year, it has adjusted its strategy to build closer to where people want to live and work, which more frequently means entering into public-private redevelopment projects with a mass-transit component. “The fog has lifted slightly,” Steve Olson, chairman and CEO of this Seal Beach. Calif.–based builder, says about his markets’ selling climate, even though The Olson Co.’s production currently stands at less than two-thirds of its peak.
The housing downturn has also ushered in a new day at Alabama’s Hunter Communities. “The recession has sharpened our pencils,” says CEO Mark Hunter, “but we’ve had to work twice as hard to get the same results as before.” His company is benefiting from its decision to cut prices by as much as $30,000 below what they were two years ago. And the builder’s operations have become far more efficient. The company has reduced its cycle time from 48 to 37 days, from framing package to completion. Hunter recently began its biggest project to date, building on 350 lots at Savannah, a new community in Triana, Ala.
Building for first-time buyers has become a notable common denominator among builders that have managed to stem the market tide. In many cases, these builders have developed a new generation of house designs, often with flexible spaces.
The following pages profile four companies that are weathering the storm and gearing up for growth. Their game plans differ and their financing is diverse. But each has simplified its operations and is focusing intensely on customer service that extends even beyond the closing. They also understand that buyer demand is fickle and fragile, and future success is anything but assured. “There’s little room for error,” says Tom Krobot of Ashton Woods USA. “We have to do a lot of things well.”