Homebuilders — Knowledge of Utah market translates into increases sales

How does a nationally ranked homebuilder compete with Utah's top residential construction firm?

Hire away one of its executives, to start.

That's what Denver-based Richmond American Homes did when it persuaded John Stubbs, a former construction manager at Ivory Homes, to jump ship in November 2002.

Richmond American is betting the move will help it capture a greater share of Utah's market, which is dominated by Salt Lake-based Ivory Homes.

And if last year's showing is any indication, Richmond American is ready to give Ivory and other Utah homebuilders some new competition.

The company's single-family home sales in Utah have jumped since it entered the market in April 2002 by purchasing the Utah assets of California-based John Laing Homes.

After the purchase, the company obtained 120 single-family building permits. By the end of 2003, permits for new dwellings reached 388 units with a value of $47.2 million, sharing a second-place finish in 2003 permits with Salisbury Homes and a fourth-place ranking in total valuation, according to Construction Monitor, a publication that tracks home construction.

Stubbs predicts that sales this year likely will top 650 units, with entry-level and first-move-up homes rising in Salt Lake, Davis, Utah and Tooele counties.

"We plan whenever we go into a market to be one of the top five builders in that marketplace," said Gary Reece, executive vice president and chief financial officer of Denver-based MDC Holdings Inc., the parent company of Richmond American Homes. "In fact, we have our eyes set on the top spot in that market by next year. We would like to be the largest builder in the marketplace."

In 2003, Richmond posted a record $212.2 million in net income among its 13-state region, up 27 percent from the previous year, with revenues of $2.92 billion, an increase of 26 percent compared to revenues in 2002.

Yet success in other parts of the country doesn't necessarily translate into a good showing in Utah. National builders coming to Utah have traditionally found some strong competition among the state's home-grown builders.

For instance, Los Angeles-based Kaufman and Broad, known today as KB Home, lasted only a couple of years in Utah before pulling out of the state, leaving some of its subdivisions half completed.

In contrast, Ivory Homes, which has been building in Utah since 1983, has ranked first in home sales for 16 consecutive years. The company has built more than 8,000 homes in the past 20 years.

Ivory Homes was founded by Ellis Ivory, who is a member of the Deseret Morning News board of directors.