Florida Home Builder Now Nation’s Largest
Two Brevard County-based builders slipped in Professional Builder magazine’s latest annual Giant 400 list, which ranks the nation’s 400 largest home builders.
At the same time, another Florida-based home builder, Lennar Corp., climbed to the No. 1 spot.
The home builders making the list - published in the magazine’s May issue - were selected based on those with the most closings, then were ranked based on those with the most housing revenue in 2006.
Miami-based Lennar - which has built communities on the Space Coast such as Fairway Crossings in Palm Bay and Heritage Isle in Viera - climbed from third place on last year’s list, which measured results from 2005.
Like many companies on this year’s list, Lennar posted gains in the number of housing units closed and total housing revenue, topping the rankings, with $14.85 billion in housing revenue in 2006.
But last year was no picnic for many builders, who saw profits shrink, as many housing markets slumped and Florida mortgage demand waned.
Even Lennar relied on aggressive discounting and other incentives to boost its numbers, Professional Builder Senior Business Editor Bill Lurz said.
“They took it to greater extremes than anyone else,” Lurz said about Lennar.
Pittsburgh-based Maronda Homes, another builder with a longtime local presence, moved up to 25th on the list, up from 34th last year.
Mercedes Homes and Holiday Builders - two Brevard County-based builders that rank high on the list - each slipped a few notches from last year’s rankings.
Mercedes ranked 28th this year, down from 23rd last year. Holiday ranked 44th this year, down from 40th last year.
But that was not so unexpected, given the wide slowdown in the Florida housing market, which mirrors what has been happening in many places in New England, California and other markets, where house “flipping” - buying and selling to make a quick profit - previously was in vogue.
Such markets saw housing activity level off.
“It’s still going to be a pretty tough year,” said Keith Buescher, president of Suntree-based Mercedes Homes. “We haven’t seen a lot of improvement.”
Lurz, who wrote an article that accompanies the Giant 400 list titled “Selective Slump,” said housing markets like Brevard County that were inundated with housing investors and speculators saw steep increases in Florida home prices several years ago - but those markets have seen the biggest declines since.
Meanwhile, places like Texas, which did not see big price increases several years ago, also have not seen prices fall like other markets have.
When many markets were flying high, builders had big profit margins, but not so much anymore, Lurz said.
Builders, meanwhile, have been adjusting to the new realities of the real estate market, which remains tepid despite low Florida home loan rates.
Lennar, for instance, is focusing on building more homes with smaller floor plans and less square-footage to bring prices down to a level that more people can afford - or are willing to pay - in certain markets like Brevard County, said Laureen Ramsey, president of Lennar’s Space Coast Division.
“What made sense yesterday doesn’t make sense today,” Ramsey said.
SOURCE: Florida Today
