News & Moves: February 1, 2009

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A look at LGI Homes' success, along with industry updates

February 15, 2009

Texas Builder Refuses to Join Downturn

Despite a challenging economy and crashing housing market, LGI Homes of Conroe, Texas (northeast of Houston), just completed its third consecutive year of increased sales thanks in large part to an abject refusal to participate in the market downturn. It's a lesson every builder could use today.

LGI moved up to No. 278 last year in Professional Builder's Giant 400 report. In 2008, the firm hit 475 closings for $63 million. This May, we'll learn just how high in the rankings LGI will jump this year, but our money is on another big leap.

LGI president Eric Lipar and executive vice president Mike Snider, who heads the home building side of the business, attribute their success to a customer-focused corporate culture and extremely aggressive marketing and sales. All the closings come from just three subdivisions, two in Houston, one in San Antonio. “Our goal is to get people out of apartments and into home ownership,” says Snider. “We don't wait for them to come to us. We go after them.”

LGI spends $60,000 per subdivision each month on direct mail advertising to area apartment complexes. All of LGI's homes are priced between $95,000 and $160,000, but the firm never mentions price in its marketing — only the dollars required to carry a home in monthly payment. “It's often less expensive for a customer to buy from us than to continue to rent,” Snider says.

On the construction side, LGI keeps everything simple, offering only six floor plans per subdivision with no options. The firm builds spec homes, ready for move-in, but no model homes. “They tour the home they'll buy,” says Snider. “Our average build time is 45 days, and we build three or four at a time. The trades never leave the subdivision,” Snider boasts.

In sales, the emphasis is on striking while the fire is hot: sales offices are open 8:30 a.m. to 8 p.m. seven days a week. “We spend a lot of time training our sales people,” Snider says. “We give them 100 days of training before they are ever allowed to serve customers and start making sales.

Snider's words of wisdom: “Two areas where builders should never cut their budgets are marketing and sales training. If you do the marketing right, the phones will start ringing. Once that happens, you'd better have a great sales staff, because when they call is the moment their desire to buy is at its highest.” — Bill Lurz 


The Next $350 Billion

— Bloomberg TV

Questions are being raised on what President Obama will do with the next $350 billion. Watch this interview with Representative Jim Jordan of Ohio from Bloomberg TV. 


Builder Rents Over Buys

— Housing Wire

California Coastal Communities, based in Irvine, Calif., sold model homes to an investor who in turn leased it back to the home builder.


Collaboration Builds 'Senior Home of the Future'

— Building Online

Eskaton Senior Services collaborated with various companies to produce what it refers to as a “senior home of the future” in Roseville, Calif.


Roundtable Discussion on Fixing the Housing Market

— Bloomberg TV

The CEO of Mortgage Bankers Association, John Courson, and economist Jay Brinkman participate in a roundtable discussion on what they think is necessary to fix the housing market.


IndyMac Sold for $13.9 Billion

— CNNMoney.com

The Federal Deposit InsuranceCorp. sold failed mortgage lender IndyMac to private investors for $13.9 billion.


How Some Arizona Home Builders Are Geting Creative

— The Arizona Republic

It's survival of the fittest. Home builders in Arizona pull creative ideas out of the hat to turn a bad thing into something good.


Top 10 Green Trends in 2009

— PRWeb

Jerry Yudelson, a green building consultant, gives his predictions on the green building industry for 2009.


Pulte Designs Homes to Span Lifetime

— Chicago Tribune

Pulte Homes has changed its focus to the “buyer for life” — from first-time to move-up to active adult.


The Status of the Housing Market

— Bloomberg TV

Watch this interview with outgoing HUD Secretary Steven Preston on the status of the housing market. What is President Obama in for as he takes office? 


Housing Push for Hispanics Contributed to Foreclosures

— Wall Street Journal

Analysis shows that mortgage lenders appear to have regarded Latinos as an untapped demographic of home buyers.


Low-Income Housing Tax Credit Market Dismal

— HousingFinance.com

Fewer affordable housing units will be built as less money comes in from the bad economy.


Economists Predict Recession to Get Worse

— Forbes

Two economists, Carmen Reinhart from the University of Maryland and Kenneth Rogoff of Harvard University, predict that housing will not bottom until 2010.


HUD Attempts to Make Documents Eeasier

— Washington Post

Most home buyers get lost in the business end of buying a home. HUD has produced an updated disclosure form to make it more transparent.


Which Markets Will Recover When?

Hank Fishkind, an economic consultant at Fishkind & Associates, released his annual Attorneys' Title Insurance Fund real-estate forecast and predicts that local markets will take longer to recover than on the national level.

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