As the economic crisis continues to worsen, consumers at all income levels are retrenching, and even the wealthy are putting major purchases—like custom homes and big remodeling jobs—on hold. To get by, many custom builders are diversifying their businesses and adapting to the new reality of surviving and succeeding during the downturn. Here are just a few examples:
Florida’s new-home construction market is scraping the bottom of the downward curve, say some local experts, and it’s likely to continue through year’s end. Local home builders, particularly custom builders, are taking on remodeling and even county government construction jobs to stay afloat and keep their crews working. Read the St. Petersburg Times article.
One Colorado custom builder has transitioned to a new model for his small business, partnering with two modular home factories to build lower-cost, more energy-efficient, prefabricated homes from stock plans or custom designs with solar hot water and other solar-powered systems. Though the homes are pre-built in a factory, each is sited to maximize benefit from the sun. Read the Summit Daily News article.
Builders of all types in Pennsylvania’s Poconos region are adapting their businesses to get by, responding to increased requests for home remodels and additions. Many of them, expecting an uptick in the spring, are simply waiting for the tide to turn. Read the Pocono Record article.
Although the building industry in Ohio has been hit as hard as other regions, some builders are still working. The few home buyers who can’t find their ideal house among those already on the market, yet are financially flush enough, are choosing to build custom homes. Read the article in the Toledo Free Press.
Cash isn’t easy to obtain in this troubled economy, but Naples, Fla.-based custom home and high-end neighborhood builder London Bay Homes recently received a $17.35 million influx of capital, along with a new investor (who wishes to remain anonymous) who purchased a minority 20 percent interest in the company. Mark Wilson, co-founder and president, cited the company’s solid business plan and responsible debt management as key attractions for the investor, an individual who has worked with the builder on several projects. London Bay was not actively seeking an investor, but given the condition of the housing market and the likelihood of its improvement, the company’s leadership believe the time is right to grow the business. “We can invest for future time periods at a time when very few other people seem to be investing in the industry,” notes Stephen Wilson, London Bay’s CFO. Originally focused on the high-end custom home market, London Bay has recently diversified into semi-custom homes, “lifestyle” condominiums, and small “village” developments in high-end communities as a way to grow its business. The majority of this investment will fund the company’s growth throughout Southwest Florida. “You’ve got to take the long-term view. Very few builders are doing that, or are indeed capable of doing that at the moment,” Wilson says. “We’re tying up land for future building. As soon as the growth comes back to the economy, houses will start selling in reasonable numbers again. The quality of the land you own will be very important for your ability to sell.” In 2008, London Bay won an America’s Best Builders award from BUILDER magazine**.
**This article was updated on March 10, 2009.
