Are Homebuilders Carving Up Markets Into Fiefdoms?

Smaller homebuilders are folding at a rapid pace as they are unable to compete with foreclosures, lack of demand and tightwad banks. The larger public builders (that survive) are gaining market share in the void. Homebuilders must obviously scale down operations and focus on their preferred markets. Public builders may be on their way to becoming regional builders.

M.D.C Holdings Q3’08 conference call: (MDC)

We expect Denver, since it had the least upside as far as being active after the 2001 adjustment, that we are very optimistic that when the market changes, that Colorado will be a key point of opportunity for us. Most of the other builders have given up.

Centex Corp. FQ2'09 conference call: (CTX)

We have the opportunity to gain market share and we’ve been steadily doing so in our key markets. Across the nation in major markets like Washington, DC, Dallas-Fort Worth, Texas San Antonio, Texas and Phoenix, Arizona, we’re gaining market share on an absolute and relative basis. This is in large part because the severity of this cycle is driving smaller and less well-capitalized players from the field. Scaled in the most attractive markets we yield further margin improvement and higher returns.

Pulte Homes Q3'08 conference call: (PHM)

Arizona continues to be one of our best markets. We continue to gain market share there in the new home market… We’re picking up market share in a lot of markets because a lot of people are pulling out of those markets. It’s not that our business is that robust in that market, but we are picking up share just because other builders are leaving. 

Ryland Group Q3'08 conference call: (RYL)

[Banks are] not really dealing with the smaller guys, so you're going to see a lot more of the smaller private guys gone… It's highly competitive. All the builders are doing the same thing. We're all fighting for a smaller market.

M/I Homes Q3'08 conference call: (MHO)

There is less competition, builders are pulled out of the market, we feel that we are gaining market share clearly in Columbus [Ohio] we are and we’re probably gaining market share ever since slowly in Cincinnati [Ohio] as well.