DO YOU FEEL LIKE THE BIG BUILDERS ARE GETTING ALL the best land deals? Do you envy their marketing budgets? Do you wish you could pay for talent like they do? Do you worry about the future of your business? If you work in one of the top 50 metro markets, you probably answered yes to a lot of these questions. It's pretty clear from Local Leaders data we published last month (“Playing the Percentages,” May, at under the May issue) that the biggest companies have developed a stranglehold on the top 50 markets.

If you build in highly concentrated markets such as Phoenix, Houston, or Denver, you know what I'm talking about. In the last five years, the amount of business that's in the hands of the 10 largest companies has dramatically increased.

Consider that in Phoenix and Houston there are 11 or more builders doing 1,000 or more closings a year. The top 10 builders in those markets control nearly half the action. It's even worse in Denver, where the top four builders, led by D.R. Horton, claim 55 percent of the closings.

Rush For Share After fanning out across the country to enter the top 50 markets, public builders in recent years have focused on building market share within those markets. Some have gotten really big. I mean, really big. Six divisions of public companies managed to exceed 3,000 units in a single market last year.

D.R. Horton and Pulte Homes broke the 4,000 barrier in the same market: Phoenix. The second largest for-profit private builder on our Builder 100 list, Choice Homes, did only 4,394 homes last year.

Some other barometers of consolidation stand out. D.R. Horton earned nearly a 30 percent share of the Austin, Texas, market. KB Home grabbed 22.5 percent of the Tucson, Ariz., market. The two companies both took down about a 20 percent share of the San Antonio market.

There are some big exceptions to this rule. Take Atlanta, which at 53,753 permits was the biggest housing market last year. The top builder there, Pulte, did only 1,400 homes. And the tenth largest builder, Choice Homes, did only 548. Kansas City, Mo./Kan., is another. The top builder in that 11,000-plus home market, Pulte, has only a 2.1 percent market share.

The top 50 markets are responsible for an awful lot of the home building action these days—744,000 closings to be exact. The Meyers Group, which collects this data for us every May, estimates that the top 10 public builders commanded 25 percent of all the single-family activity in the top 50 housing markets.

Future Shocks If you build in any of these top markets, you are probably concerned about the future availability of land. An NAHB survey done last year showed that 83 percent of small- and medium-sized builders agreed that national builders with large lot inventories make it difficult for them to secure lots.

Survey respondents identified the following as the most profitable niches for small- and medium-sized builders: custom home building, building on the owner's lot, remodeling, and light commercial. A full 70 percent of respondents said they were interested in doing infill construction and half said they were interested in building upscale housing on tear-down lots.

Though competition has increased, the home building industry still isn't as consolidated as most other major industries. Increasingly, though, when it comes to competing with the big builders, you need to zig when they zag.

Boyce Thompson
Editorial Director