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Builders by the Numbers


Builders by the Numbers

There’s no such thing as an “average” builder. Likewise, no builder of any note or ambition would dare think of himself, his company, and its products and services as merely “average.”

By John O'Reilly, Contributing Editor February 28, 2002
This article first appeared in the PB March 2002 issue of Pro Builder.

There’s no such thing as an “average” builder. Likewise, no builder of any note or ambition would dare think of himself, his company, and its products and services as merely “average.” Most operators understandably regard themselves as exceptional or at least striving hard toward that distinction — apart from if not yet above the rest of the crowd they must compete against daily.

But that doesn’t mean we shouldn’t attempt to define what constitutes a typical home builder, circa 2002. Using the means and medians culled from the results of a recently completed survey of more than 670 readers, Professional Builder has fashioned a composite, statistical portrait of the average builder, if such an animal did exist.

We can therefore say the “average” builder is likely to be a middle-age male working as a senior manager — most likely as an owner, a partner or a principal — in a privately held enterprise. Last year, his company finished 150 single-family houses, 90 multifamily units, and 65 luxury or custom homes, with construction receipts totaling $2.41 million.

This Average Builder has been in residential construction for more than 22 years, having served one or two other organizations before joining or starting his current company. But he hasn’t switched jobs for quite a while, having worked the past 16 years with his present firm and the last 14 in his current position. His most recent annual raise was about 9%, and he regards that increase and his overall annual income of $84,000 as commensurate with his job performance, which includes overseeing the work of more than 14 people.

The professional skills he considers most critical are his ability to supervise these “report-to’s,” followed closely by a knack for reaching goals and getting the job done, as well as a firm grasp of the technical side of the home building business. Interestingly, he tends not to think that working long hours is a primary factor in his success, although he devotes 46 to 52 hours a week to his work, depending on the season. Far and away, the most daunting problem facing his organization is the general lack of qualified labor and skilled tradespeople. Nonetheless, his firm spends more than four times as much on marketing and on technology as it does on recruiting, and its training budget is only 57% as big as its marketing and technology budgets.

A college graduate, perhaps with a postgraduate degree, our Average Builder owns a house or condominium, drives more than one vehicle, and keeps his money tucked away in stocks and bonds, as well as an asset especially dear to his heart — real estate. He entered the building business because, well, he likes to build things. He also likes being his own boss. His biggest satisfaction on the job? That’s easy — the feeling of accomplishment he gets constructing homes, whether one at a time or whole subdivisions of them.

Our Average Builder tends to see himself as competitive yet conservative. Five years down the road, come what may with the economy and this industry, he expects to be doing the same job at the same company, although he plans to retire by age 61, which is roughly a decade away for our Average Builder.

Finally, if he had the opportunity to do it all over again, he would.

Beyond the Averages
Means and medians are useful in getting a quick handle on home builders, but by no means do they tell the entire story of this industry. By asking respondents for their ages, titles, annual incomes and geographic locations, we were often able to draw contrasts between one subgroup and another. Inevitably, opinions and perspectives diverged on certain questions: between young and old, middle income and upper income, general management and construction management, and even among regions. These numbers behind the numbers help give our builder portrait more interesting and more telling shadings.

How would you describe yourself?
The No. 1 adjective, checked by three in five respondents, was “competitive.” But builders working for larger companies or earning higher incomes were much more likely to see themselves in this light: 74% of builders whose firms have more than $10 million in annual receipts said they are “competitive” versus 60% in the $5 million to $10 million range and 44% in the under $500,000 category. Similarly, 69% of respondents earning $120,000 or more annually labeled themselves “competitive” compared with only 37% of those making less than $40,000. In the six other income categories between the lowest and the highest, the percentages ranged from 51% to 62%.

Company size doesn’t hold much sway over whether a builder sees himself as “ambitious”: percentages ranged from 43% to 50% in all six annual-receipts categories. But ambition does seem to rise with annual income: 53% of the $120,000-plus group said they are “ambitious” versus 29% of those earning less than $40,000.

Builders working for larger companies and earning higher incomes were also more prone to see themselves as “outgoing, daring,” as well as “vigorous, athletic.” They tend to be more “fashion-conscious” and “politically conservative” as well, although the percentages for these three descriptions were much lower than for “competitive” or “ambitious.” At the opposite end of the size spectrum, if you work for a builder with less than $500,000 in annual receipts, you are more likely to describe yourself as “reserved, cautious.” Likewise, if you make less than $40,000 annually.

But the favorite self-description for smaller builders with smaller incomes had nothing to do with business or politics. Forty-eight percent of those earning less than $40,000 and 64% of those pulling down $40,000 to $49,000 described themselves as “blue-jeans dressers” — the No. 1 description for each group. Casual dress garnered 44% to 60% as well in all other income categories except for the largest: Only 36% in the $120,000-plus category chose this label.

What are your major career worries?
None of the 11 “worry” options our questionnaire presented attracted more than 34% of the vote, with “feeling too much stress” achieving the highest total. Just less than 24% of respondents said they had “no worries” at all. In short, home building appears to be very good to most builders. But the breakdowns again offer interesting twists on these overall figures.

Stress was the No. 1 problem across all incomes and all but two of the company volume categories: the very smallest companies (less than $500,000) and companies in the $5 million to $10 million range. For these two groups, “hours are too long” ranked No. 1. Stress, long hours and “long-term job security” seemed to be bigger problems for middle-income managers as well as for midsize companies. As is so often the case today, the life of Mr. In-Between is not happy. Better to be very big or very small.

On second thought, make that very big — period. Forty-one percent of those earning more than $120,000 annually and 31% of those working for companies with $10 million in yearly receipts checked the “no worries” option versus 19% of those earning less than $40,000 and 22% of those working for companies with less than $500,000 in annual volume.

Stress seems to hit sales and marketing managers (44%) and presidents, executive vice presidents, general managers and chief financial officers (41%), and even architects and designers (38%) harder than owners, partners and principals (33%). The top execs were the most likely to cite long hours (31%).

There appears to be more stress in the North Central section of the United States than anywhere else. Forty percent of respondents from this region checked the stress box, while the three other regions (Northeast, South and West) were in the low 30s.

Why did you enter this field?
“Like to build things” (47%) and “desire to be my own boss” (41%) were the top responses to this question, well ahead of the next two choices, “to make money” (32%) and “wanted a hands-on profession” (23%). Building homes was this industry’s No. 1 attraction or a very close second in every categorical breakdown. But, once again, there were telling variances.

For example, smaller operators (less than $500,000 in revenue) put equal weight on building things and career independence, with each being checked by 50% of respondents in this category. For managers with larger companies (more than $10 million in annual revenue), building homes was the No. 1 factor (44%), followed by making money (27%). Being the boss finished third (21%) with these larger builders, as it did for respondents in firms one notch down in annual revenue at $5 million to $10 million.

Respondents making $120,000 or more made scant distinction among the top three factors, with each being named by roughly 40%. As you move down the income scale, “like to build things” looms more important, with 46% of the under $40,000 group checking this factor. “Boss” and “money” attracted only 31% and 23%, respectively, for these builders. In contrast, being the boss finished first with the very top managers (owners, partners and principals), while all the other job categories put the desire to build atop their lists.

Where would you like to be in five years?
Whatever their attitudes about change elsewhere in their businesses, our respondents have little time for it in their careers. More than two in three respondents figured they would be “right where I am now” come Jan. 1, 2007. What’s more, this choice garnered the majority vote in every categorical breakdown but one: respondents 37 and younger. For this group, only 40% said they’d be staying put; 32% want “a better job in this industry.” At the other end of the spectrum, not surprisingly, 100% of the over-60 crowd have no plans for moving on. Likewise, 75% of the owners, partners and principals and 63% of presidents, executive vice presidents, general managers and CFOs.

Some other interesting responses to this question: 23% of those with the largest companies (at least $10 million in annual revenue) expect to move on, 10 percentage points higher than those in the next-highest-volume category. All other groups were in the single digits. Obviously, if you work for a big company, you can’t be 100% secure with your present position. Besides, chances are you want to move up — within or outside your organization.

Equally interesting, while 79% of those earning $120,000 or more annually want to stay where they are, only 57% of those earning less than $40,000 are content with the present. Fifteen percent expect to have a better job, while 10% see themselves in another industry. Twenty-two percent of sales and marketing managers also figure to move into another field, while 27% of architects, 28% of construction managers and 30% of project superintendents, field supervisors, estimators and purchasing managers want to be working in better jobs in five years.

Which of the following are problems for your business?
“Lack of qualified labor” and “lack of skilled tradespeople” finished Nos. 1 and 1-A, attracting 68% and 67%, respectively. (“Lack of quality standards” finished a distant third at 24%.) The building industry obviously has reached an overwhelming consensus on the seriousness of these problems, so it is difficult to isolate significant variances. But there are a few.

For example, although company size appears not to be a major factor, older managers are more likely than their younger colleagues to see labor shortages as a serious problem: 69% of those older than 60 named a lack of qualified labor as their primary problem versus 55% of those younger than 37. Annual income is even more of a factor: 79% of those making $120,000 or more pointed to labor shortages as their No. 1 problem. The three salary categories under $60,000 finished at 58% to 59%.

There were noteworthy geographic differences as well, with respondents from the West judging the lack of qualified labor as less of a problem than respondents in the other regions. Fifty-nine percent of Western respondents named it a problem versus 69% in the North Central region, 71% in the South and 75% in the Northeast. Meanwhile, only 57% of North Central respondents saw the lack of skilled tradespeople as a problem versus 70% in each of the three other regions.

If you had it to do over again, would you choose a career in residential construction?
The response to this question was a resounding “yes” by 69% of respondents, with “not sure” (21%) outpacing “no” (10%). Whether they work for large firms or small, whether they earn low incomes or high, whether they are young or old, our respondents are not second-guessing their choice of a career in home building.

This certainty deteriorates only a modest amount as you move down the personal income ladder. For respondents with incomes of $120,000 and up, 72% said they’d again opt for a building career, while only 19% described themselves as uncertain. For those earning less than $40,000, the percentages were 64% “yes” and 30% “not sure.”

Company revenue has a similar impact: With size comes certainty. Seventy-eight percent of respondents working for companies with more than $10 million in annual receipts said they would choose a career in home building again. Only 13% were “not sure.” Moving down the revenue scale, the “yes” vote stays comfortably in the 60% to 70% range, but the “not sure” vote climbs into the mid-20s. One in four respondents working for companies with less than $500,000 in revenue questions whether he would choose the same professional path.

Yet the best data coming from this question is this: 75% of respondents younger than 37 would become home builders if given a chance to do it again. Only 19% are “not sure.” Happily, the two numbers are the highest and lowest, respectively, of all the age categories. The future of home building appears to be in capable and enthusiastic hands for the next quarter-century.


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