My column for the July edition of Builder & Developer magazine is now posted online.
An excerpt:
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My column for the September 2015 issue of Builder and Developer magazine is now posted online.
For this issue, entitled "More Builders are Becoming Landlords" I wanted to review and discuss the nascent trend of builders such as Lennar and Toll Brothers building rental housing (including single-family homes) in order to broaden their business scope and provide steadier cash flow.
An excerpt:
According to recent U.S. Census data, in 2014 just under 65 percent of new home starts were for the traditional single-family home, with the balance mostly comprised of multi-family projects with five or more units. And yet as recently as 2009, single-family starts stood at 80 percent versus just under 18 percent for larger multi-family developments, which means that the share of multi-family housing starts nearly doubled in just five years.To read the entire column, click here.
So if the share of new, single-family home starts is not returning to normal as originally planned, how are builders coping in this strange, new world? For some, such as Lennar and Toll Brothers, by joining it.
Although the current state of the housing market makes it an odd time to be declaring the 'most admired home builders,' for the second year in a row, Fortune magazine compiled their list of 'most admired' companies based on input from businesspeople in all types of industries. Number 1 across all industries? A tech-related company called Apple, followed by Warren Buffett's Berkshire Hathaway.
In the home building sector, KBHome took top honors, followed very closely by Toll Brothers, which specializes in luxury housing. According to the press release issued by KBHome (which is helpful because it was hard to find on the Fortune Web site), the survey methodology was as follows:
FORTUNE’s survey partners at Hay Group, a global management consulting firm, started with some 1,400 companies: the FORTUNE 1,000—the 1,000 largest U.S. companies ranked by revenue; non-U.S. companies in FORTUNE’s Global 500 database with revenues of $10 billion or more; and the top foreign companies operating in the U.S. They then sorted the companies by industry and selected the 15 largest for each international industry and the ten largest for each U.S. industry.
The survey covers 64 industries: 25 international industries and 39 primarily U.S.-market industries. To create the 64 industry lists, Hay Group asked executives, directors, and analysts to rate companies in their own industry on nine criteria, from investment value to social responsibility. This year only the best are listed: a company’s score must rank in the top half of its industry survey.
In other words, if a builder isn't listed below, then 'better luck next year!'
| Company | Industry | Overall score |
|---|---|---|
| 1 | KB Home | 6.58 |
| 2 | Toll Brothers | 6.53 |
| 3 | Centex | 6.24 |
| 4 | Pulte Homes | 6.06 |
| 5 | NVR | 5.71 |
| Company | Industry | Overall score |
|---|---|---|
| 6 | D.R. Horton | 5.09 |
| 7 | Ryland Group | 4.89 |
| 8 | Lennar | 4.70 |
| 9 | Hovnanian Enterprises | 3.84 |
| 10 | Standard Pacific | 3.45 |