William Lyon Homes Takes Chances

During the recession, William Lyon Homes took chances that paid off

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William Lyon Homes

Location: Newport Beach, Calif.
Year Founded: 1956
2013 Rank: 31
2013 Closings: 1,435
Growth Since 2012: 51%
Metrostudy Says: The company is known for its mix of products ranging from condominiums, townhomes, and single-family homes on varying lot sizes in Class A locations. This product diversification is important for any builder to be competitive. Its Coyote Creek community in Milpitas has been extremely successful due to its great Silicon Valley location, which has very little new construction activity and very high demand.

Perhaps most acute in cities with especially feverish pre-recession growth, the prolonged housing slump chased scores of home builders out of coastal California, Las Vegas, and Phoenix. Yet William Lyon Homes clung to those once-sizzling markets, even as deliveries of its single-family and attached homes skidded from 3,471 in 2004 to fewer than 700 in 2011, forcing the company to whittle its 980-employee staff to 180.

“Our thesis was when those markets did recover, that they would recover at a faster rate than the national average,” recalls president and COO Matt Zaist (pictured, left).

So the firm held on to its sizable book of land, which is located in supply-constrained markets like coastal California, where company forecasters believed demand for new homes eventually would rebound with a vengeance. And even as it stalled a number of planned building projects, the builder continued to slowly acquire land through the downturn. That bet started to pay off in 2012 as the builder activated many of those stalled projects and doubled its year-over-year home sales revenue from 2012 to 2013, securing the builder the No. 31 spot on the 2013 Builder 100 list.

Traditionally a builder for first-time buyers, the firm retooled its product offering during the downturn. Instead of catering only to cash-strapped young buyers it expanded into the first- and second-move-up markets. By the end of last year, 70 percent of its deliveries went to move-up buyers and 30 percent sold to new homeowners.

In December 2012, William Lyon Homes expanded into Colorado with the purchase of the bankrupt move-up home builder Village Homes. And since then, the firm has invested $500 million in additional land, mostly in infill locations in coastal California and in Colorado and Las Vegas. By the start of this year, the builder held 13,000 lots, says CEO Bill H. Lyon (pictured, right).

Looking ahead, says Zaist, the company anticipates it will increase its community count by north of 50 percent this year without expanding into new markets. “We think 2014 will be a better year for our company and for the industry as a whole,” agrees Lyon.

Source: Builder 100 data

Learn more about markets featured in this article: Los Angeles, CA.

About the Author

Sharon O'Malley

Sharon O'Malley is a freelance writer based in College Park, Md. She has contributed to BUILDER for 20 years.

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