Denise Dersin

Editor in Chief

ddersin@hanleywood.com
Anje Jager/agencyrush.com Denise Dersin Editor in Chief ddersin@hanleywood.com
Denise Dersin

Editor in Chief

ddersin@hanleywood.com
Anje Jager/agencyrush.com Denise Dersin Editor in Chief ddersin@hanleywood.com

By this, my ninth year working on the Builder 100 list, I feel as if I’ve seen a lifetime’s worth of ups and downs in the housing industry. Regular, predictable progress, heady bursts of unparalleled success, the darkest days of loss imaginable, and slow, tentative, baby steps on the road back to normalcy—all these vastly different experiences whizzed by in less than a decade’s time.

It would be an understatement to say that the last few years have been a difficult ride. And it would be completely understandable if all of you who suffered through this time said you’d had enough and closed up shop. As we all know, many did drop out along the way. Anecdotal estimates put the home building company attrition rate in excess of 60 percent over the course of the recession, with some of those who left the arena hanging on until just recently. Sadly, this year’s Builder 100 list lost some stalwarts: 30-year-old Cary, N.C.–based Anderson Homes and Atlanta’s Bowen Family Homes, in business for more than 40 years, for example. And Pasquinelli, whose home building roots go back to the 1950s, left the list last year, but just filed for liquidation last month.

But upon close examination of this year’s list, it appears that some of you didn’t get the memo. Landon Homes bucked conventional wisdom by starting up in Plano, Texas, in 2008. By the end of 2010, its closings stood at 190 homes, 111 percent better than the year before. The same went for Raleigh, N.C.–based ForeverHome—its four principals started that company in 2007. It logged 225 closings in 2010, up from 56 in 2009. Longtime Dallas builder Gehan Homes improved every part of that company’s processes and operations and reaped a 62 percent increase in closings. First Texas Homes tells a similar story: It overhauled its product design and improved customer service and referral rates for a 37 percent increase in closings.

These numbers are pretty spectacular in a year of only 323,000 new single-family home sales, the worst year on record for new-home sales and the fifth straight year of declines. Some might say that sales were easier to come by in Texas and North Carolina during these times, that these areas are some of the few in the country that are not as affected by a dearth of home buyers. But I would bet that every one of these builders would disagree with that assessment. In this economy, no new-home sale is a walk in the park.

And besides, how would that explain some of the other success stories? Someone should tell Neal Communities, for example, that there’s a recession going on and that Florida is in the center of the storm. The Lakewood Ranch–based company closed 272 homes last year, an increase of 55 percent over 2009. Nashville’s 4.4 percent decrease in home sales for the year makes The Jones Co. of Tennessee’s 42 percent increase in closings even more remarkable. And the list goes on: DSLD in Baton Rouge, La., with a 53 percent bump, while Marietta, Ga.’s Traton Homes closed 43 percent more homes last year.

The comments in the surveys submitted by these builders and others tell the real story. Each of them took a good hard look at their market and identified their target buyer. Then, they adjusted their operation and their product for that buyer. For many, that meant smaller homes with fewer options to attract first-timers. It also meant conserving cash, by not starting homes until a signed contract was in hand. For others, such as D.C.’s Stanley Martin Cos., it meant more specs, not fewer. Locals unwilling to commit until they’d sold their homes and buyers relocating to the area both wanted homes that were ready when they were.

There was nothing easy about the process. The large percentage increases in closings for these builders mean that 2009, by contrast, was probably pretty grim. But they kept at it, bloody, but unbowed, and now have something to celebrate. But just for a moment. There’s a lot of work still to be done.

Write back to: ddersin@hanleywood.com