Steven J. Hilton is co-CEO and co-chairman of Meritage Homes, which had a standout year in 2005, with closings up almost 50 percent over 2004 and net earnings up 84 percent. Hilton is “cautiously optimistic” about the current year. Public since 1996, Meritage caters to a broad range of buyers in the South and West, though its mainstay is move-ups.
The company is headquartered in both Scottsdale and Dallas. Steve Hilton, wife Suzanne, and their four children live in Scottsdale, and he spoke to BIG BUILDER's Gene Randall last month.
BB: Does a year like 2005 produce inflated shareholder expectations?
SH: I think today shareholder expectations are very low, as reflected in our stock price, but we have high expectations for ourselves after a blockbuster couple of years.
BB: Pricing power was important last year. Is there much of that now?
BB: As demand cools what's the role for incentives?
SH: Certainly we use more incentives. [They] can be a very useful tool to stimulate demand.
BB: Which markets appear healthiest?
SH: Texas is probably the strongest—all the major markets in Texas are probably the strongest of all the markets today—but we are still selling a lot of homes in Arizona and Nevada, at very strong margins.
BB: You count mainly on move-ups, right?
SH: Two-thirds of the homes that we build and sell are first, second, or third move-up. We are now getting into urban and luxury, but move-up homes will always be our biggest piece of the business.
BB: Do you miss anything from when Meritage was privately held?
SH: I miss not having to see my paycheck in the papers. No, we enjoy being a public company. There [are] a lot of advantages: access to capital, the ability to buy larger parcels of land, the ability to have volume purchasing, national contracts. It has done very well for us and we have no regrets whatsoever.
Learn more about markets featured in this article: Phoenix, AZ.