Hard Landing

Reversals of Fortune: Remember when, only a few years ago, builders feared the Top 100 would control 50% or more of the market? The recession has changed that calculus and continues to alter the industry’s balance of power.

Reversals of Fortune: Remember when, only a few years ago, builders feared the Top 100 would control 50% or more of the market? The recession has changed that calculus and continues to alter the industry’s balance of power.

The Bigger They Are…: The 10 largest builders, having cut back their production activities, saw their market share of closings decrease to 20.41%, from 22.69% in 2008. Builders ranking 51 to 100 closed 17,612 homes, which translated into a slight uptick in market share. But that share number is deceiving, as this builder segment actually closed more homes—21,367—in 2008.

Necessary Compromises: Several builders decided last year that hitting—or at least getting near—closing targets was more important than revenue gains. For example, Sares-Regis Group reported a 30.4% increase in closings, which generated nearly $340 million in sales that were 18.8% down from the previous year. Other builders even held their ground by lowering prices below construction costs. What eff ect this discounting has on buyers’ future expectations about pricing remains to be seen.

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