Sure, low interest rates were the main engine that pulled the home building industry up 10.9 percent to 649,000 completed houses in 2012 compared with the previous year. Market momentum might have been enough for some builders to generate some kind of revenue gain after enduring a long economic season of cutbacks and inactivity. But the companies who reported revenue growth of 40 percent or more have a common strand in their stories. They started setting the table for their rebound as far back, in some cases, as the 2006 housing crash.
After selling off speculative land holdings in 2006 and 2007, Fred Delibero, president and CEO of Summit Custom Homes in Lee’s Summit, Mo., knew he couldn’t continue to run his company as he did before the recession. So Summit Custom scrapped its product offerings and focused on building only two-story houses, which appealed to a buying group that was ready to deal just as housing started to bounce back.
“I recognized early on that we needed to differentiate ourselves in the market,” Delibero said. “We were building a broad spectrum of plan types at different price points.”
Many builders might have deemed the supply and demand situation for prime lots to be a big picture variable that was beyond their control. But rather than wait out the downturn, managers for Granite Ridge Builders decided to become their own land developer.
“Many people asked me: If a lot was bad five years ago, is it still bad? Yes,” said Tony Reincke, president of the Fort Wayne, Ind.-based company. “[Many] people picked the good ones, so we had to reproduce our own good lot inventory.”
Filing for bankruptcy can not only be disappointing, it can also create acrimony and sever relationships. Yet Jeff Caruso navigated his way through the rough seas of Chapter 11 reorganization with tons of communication. So much so that Caruso Homes, Crofton, Md., held on to its ties with investors, suppliers, and the trades. The company is leaner and running more efficiently with back-office systems that handle contract management, punch lists, and social media tracking. Today the builder also is one of the top revenue gainers on our chart based on percent change between 2012 and 2011 financial data.
Almost 26 percent of the 242 builders who submitted financial data for Professional Builder’s annual Housing Giants report (see May 2013 issue and HousingZone.com) recorded revenue exceeding 40 percent. They turned the downturn into an opportunity to retrench and improve. Some even hired more talent and raised marketing budgets.
We reached out to 11 builders on our list of Big Gainers so they could share their strategies for success.Granite Ridge Builders - Fort Wayne, Ind.Caruso Homes - Crofton, Md.Warmington Group - Costa Mesa, Calif.Marlyn Development - Virginia Beach, Va.Jimmy Jacobs Custom Homes - Georgetown, TexasAmerican Legend Homes - Lewisville, TexasFortune-Johnson Inc. - Norcross, Ga.Summit Custom Homes - Kansas City, Mo.DSLD Homes - Denham Springs, La.Century Communities - Greenwood Village, Colo.CBH Homes - Meridian, Idaho