Competition among homebuilders REMAINS INTENSE


It's not easy at the top.

Some of the biggest homebuilders in the Baltimore region claim just the tiniest piece of the housing market -- and wage a constant battle to keep it.

Most top-selling builders own less than 3 percent of the market, a trend that has held steady in the region and throughout much of the United States for several years, industry experts say.

During the first half of the year, Ryland Homes, followed closely ,, by Ryan Homes, then by Pulte Home Corp. sold the most houses, claiming 11.5 percent, 10.2 percent and 4.4 percent of the market, respectively, according to Legg Mason Realty Group Inc.

The remaining builders in a top 20 list, ranked by number of sales, had market shares ranging from 2.8 percent for Trafalgar House Residential to 1 percent for Dolben Gardens Ltd., Legg Mason said in a quarterly survey.

Competition remains intense. Gone are the days when builders picked out land and put up homes, confident the buyers would follow. Today's buyer might shop a dozen builders and still waver. Builders want to be prepared. With the help of focus groups, demographic studies and market analyses, they're likely form mental snapshots of their future homeowners -- by age, habits and lifestyle -- long before turning the first shovelful of dirt.

"A lot of builders are vying for buyers, and land costs are up, but prices have not necessarily gone up," said Wanda Cross, marketing manager for Ryland's Baltimore division, which sold 577 homes during the first six months of the year.

"It's increasingly difficult for builders to stay in business. You have more builders vying for the same or a little less of what the pie was last year."

Baltimore's landscape of builders typifies the shape of the industry nationally and in other regions, said Paul Emrath, director of survey analysis for the National Association of Home Builders.

"It's a very segmented business, and you have an awful lot of companies involved, from the large, publicly funded, publicly owned companies to the guy with the pickup truck who builds one home a year," said local builder Tom Bozzuto, president of the Bozzuto Group.

The guys with the pickups have always outnumbered the big companies. The median number of homes built per year by members of the builders association is just eight, Mr. Emrath said. But the national companies rely on name recognition and economies of scale to outpace the local and regional builders in sheer numbers.

The top sellers in the Baltimore region, for instance, can claim that distinction in numerous markets, with Ryland among the top five builders in 10 cities, including Atlanta, Cincinnati, Denver and Houston.

Ryan also places in the top five in Charlotte, N.C., Pittsburgh and Richmond, Va. Pulte ranks among the top five in more than a dozen cities, Chicago, Dallas/Fort Worth, Fort Lauderdale and Kansas City, to name a few, according to the Home Builders.

Ms. Cross, of Ryland, says the company can boast the largest market share in the region for the past three years because "Ryland gives good value for the price and has a lot of repeat buyers or family members. The name recognition is very high."

During the second quarter of the year, Ryland had the top-selling detached, single-family community in the region, selling 20 Colonial/transitional homes in Pointers Run in Columbia. Two home styles, ranging in price from $180,000 to $210,000 and from $240,000 to $285,000, offer 9-foot ceilings, two-story family rooms and three to five bedrooms. Base sales prices for the second quarter averaged $263,786 in Pointers Run, Legg Mason said.

A number of factors work in the community's favor, including good schools, the availability of a new product in the newest and last of Columbia's villages, and affordability compared with similar homes in upper Montgomery County, where many buyers come from, Ms. Cross said.

BTC Trailing Ryland in Legg Mason's market share breakdown was )) Ryan Homes, which has built its strength on the lower end of the market, building lower-priced homes by developing on a large scale and using in-house services for design, supplies and sales, said Tim Naughton, sales manager for Baltimore South. Anne Arundel County, which falls within that division, has proven a hot market for Ryan, Mr. Naughton said.

"We have a good relationship with top developers," he said. "They know we can sell quickly. They'll come to us when they have developments available, and we'll get in on the ground floor."

In Russett, one of three large planned developments in western Arundel, Ryan sold 26 homes during April, May and June, with the base price averaging $114,900, making Ryan Homes at Russett the region's top-selling townhouse community, the Legg Mason survey said.

Homes priced at $114,900, with either two or three bedrooms, were designed so young families could own an affordable home and still benefit from the community-based recreational amenities, such as a pool, tennis courts and nature preserve, Mr. Naughton said. A major selling point has been the community's strategic location near the Baltimore-Washington Parkway, with access to both cities, he said.

Small to mid-sized builders can't hope to duplicate the operation of a larger company, but they can make up for it in other ways, builders said.

"The biggest advantage is the nationals can put down substantial deposits with developers and gain prime locations of land," said Bob Ward, president of Bob Ward Homes, which builds primarily in Harford County and captured a 1.9 percent share of the regional market, ranking ninth in number of sales. Mr. Ward said his company projects building 155 homes this year.

"My size has some advantages we try to capitalize on, such as customization," Mr. Ward said. Also, he said, "We can react a lot more quickly to changes in the market."

A mid-sized company, for instance, can respond quickly to market niches. Bob Ward Homes is zeroing in on the "move-down" market -- typically older buyers moving out of larger homes who still want the features of a single-family home.

Before starting to build 120 townhouses in the Rosefields subdivision in Forest Hill in Harford County, the builder researched the market, taking the advice of focus groups. Then he designed homes with features sought by those "moving down" -- driveways and garages on the first level, rather than the lower level, formal dining rooms, eat-in kitchens, first- or second-floor laundry rooms and walk-in closets.

"It's very difficult to compete head-on with the large publicly traded companies that have a great deal of capital, but smaller companies make up in flexibility and local market knowledge what they lack in capital," said Mr. Bozzuto, whose Bozzuto Homes ranked 10th in sales, with a 1.9 percent market share.

He has carved a successful market niche in condominiums, often catering to single mothers and their children or empty-nesters, he said.

Bristol Green, a Bozzuto condominium development in Columbia, ranked fourth in sales for multifamily communities in the region, Legg Mason said. The 120 units, some with detached garages, sold twice as fast as expected -- in 12 months -- with the last sales during April, May and June, Mr. Bozzuto said. Sales averaged $111,000, he said.

"For years, people have told me what a bad condo market Baltimore is," he said. "We've sold an attractive product at an affordable price that appeals to the segment that doesn't want a single-family home or townhouse. We're appealing to people making $45,000 who don't want the aggravation of a yard, but who want the permanence of homeownership."

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