By Susan Berfield | Bloomberg Businessweek
At the sales office for a new development southeast of Phoenix called Waters at Ocotillo, the PulteGroup (PHM) representative says she’s too busy to talk. It’s a Monday afternoon. One customer is signing a contract in her office, she explains, and another is due soon. The model for Pulte’s Yucca home is open, though. The price starts at $392,990. It’s two stories and 2,688 square feet, designed for four bedrooms and three cars. It’s stucco—as is nearly every home in every subdivision in Phoenix—high-ceilinged, and energy-efficient. The model is completely furnished, with fake iPods, iPads, and family photos. There’s a real foosball table and Whitney Houston’s Greatest Love of All streams through built-in speakers. The Yucca is part of what homebuilder Pulte calls the Cactus line; there’s also the Majesty line, which is bigger and has courtyards.
The 28-acre subdivision is one of 309 developments in the metropolitan Phoenix area with new homes for sale. It opened in December 2012, with 96 lots, and Pulte has been releasing them in batches: 16 are already under contract, and the company is raising prices. One buyer, Marc Victor, a lawyer, lost out on a home the first time. Potential buyers can bid on premium lots, and he was outbid. In the second round he offered $156,500 for a lot listed at $120,000. He’s hoping workers start pouring the foundation soon.
Pulte is the largest homebuilder in the U.S. by market value and, like most builders, had a very good year. Its revenue was $4.8 billion in 2012, with a profit of $206 million. That’s well below the $1.4 billion it earned in 2005 but far above its $2.3 billion loss in 2007. Last year, Pulte was the best-performing stock in the Standard & Poor’s 500-stock index, nearly tripling in value. Its rivals, among them Lennar (LEN), Toll Brothers (TOL), and D.R. Horton (DHI), all were profitable, too. In December builders broke ground on more houses than expected. Tri Pointe Homes (TPH) went public in January, the first homebuilder to do so since 2004, and in February Taylor Morrison said it was doubling the amount it aims to raise in its planned IPO. “The management teams at the homebuilders are thrilled,” says Ivy Zelman, who runs her own real estate research firm and is one of the IPO’s lead underwriters.
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If you’d like to discuss real estate matters, contact RLG founder Jordan Rose, jrose@roselawgroup.com
