Drees Homes’ recent acquisition of Monticello Homes expands the home builder’s presence into San Antonio, marking a significant step in executing its Centennial Strategy, which was outlined in 2024 to guide the company’s growth ahead of its 100th anniversary in 2028.
President Tim Terrell notes San Antonio was identified as one of two markets for future growth when the company put together its Centennial Strategy.
“San Antonio is the fifth largest new home market and is a natural fit, given that it rounds us out with a presence in all of Texas’s top four metros,” Terrell tells BUILDER. “It’s a growing market that scales seamlessly into our regional resources and the product and people fit with Monticello couldn’t be any better. [The acquisition] is a case of one plus one equals three from our perspective.”
Terrell believes the acquisition positions Drees Homes to scale quickly in San Antonio. By combining Monticello’s family-owned leadership structure with Drees’s capital, operating and software systems, data analytics, and business approach, the company is positioned for long-term growth.
“We’re going to collaborate between the Drees leadership team and the Monticello team and come up with an integration plan that works for both parties with the overriding theme of continuing to build great homes with high quality and a wonderful customer experience,” says Terrell. “As long as we execute on those tenants, we’re okay being patient and being a little bit slower on the integration, but we expect most of the integration to take place over the first 12 to 18 months.”
With a presence in San Antonio, Drees Homes now operates in 11 markets, including Northern Kentucky and Cincinnati, Cleveland, Indianapolis, Jacksonville, Nashville, Raleigh, Washington, D.C., Austin, Dallas, and Houston. The company ranked 41st on the 2024 Builder 100 list with 2,128 homes closed in 2023.
Terrell says long-term, Drees Homes is trying to grow every one of its markets to close at least 300 homes per year. That number, he says, gives Drees the scale efficiencies needed to compete against the big public builders in those markets.
“Monticello Homes closed around 130 homes last year [in San Antonio]. On average, our divisions last year closed 230 homes; some were well above that and over 500,” Terrell says. “We really see the benefit when we get to 300 closings. It provides job opportunities for our people, for our trades, and it gives us the buying scale that we’re looking for.”
Growing each division to 300 closings or more is one of six key pillars of the Centennial Strategy for Drees Homes. The other elements include delivering a great customer experience, being uniquely skilled at buying lots, providing a seamless buying experience enabled by technology, growing its build-on-your-lot business Elevate, and entering into new markets. Terrell says the company is also focusing on continuing to place culture and people at the heart of everything it does.
Drees Homes has plans to enter its next market within two years. The company prefers to enter via acquisition due to immediate profitability, risk management, and the ability to integrate with a team already executing at a high level. However, the company is open to exploring all options for expansion.
“The next new market is already identified. While we’re not ready to announce that yet, we are already acquiring lot positions and expect to be building homes within the next two years in another new market,” Terrell says.
The Centennial Strategy also leans heavily into technology, which Terrell says differentiates Drees Homes.
“We view our personalization and customization practices as what differentiates us in the marketplace and attracts a discerning buyer, looking for the value advantages of a production builder along with a high style architecture and livability of a custom home,” Terrell says. “We have continued to invest in technology to deliver on those very difficult tenets of operation.”
He says the approach to the customer experience starts with a strong, easy to navigate website and includes strong internal operating systems for team members, as well as strong analytics to evaluate various aspects of the business. Drees Homes surveys customers at various stages of the home buying process and gathers feedback from lost prospects to assess what works and what doesn’t during the customer journey.
“Getting that feedback loop is imperative to fine tuning the strategy and making sure that we’re executing at a level that creates the brand commitment that we want,” Terrell says. “Currently over 33% of our buyers are either repeat buyers or referred buyers; we like that and we want to continue to grow that.”
Finally, Terrell says Drees Homes will also remain focused on executing its “quasi-land-light” business model, which helps the company turn inventory nearly twice as fast as the industry average.
“As a private company operating out of the public markets, we utilize [the quasi-land-light strategy” as an advantage in being nimble and flexible to make various deal structures work,” Terrell says. “That nimbleness and that ability to be flexible is a key advantage that we have being outside of the public markets.”
