A handful of out-of-state home builders that gambled on the Indianapolis market during the depths of the residential downturn are beginning to see their bets pay off.
The metropolitan area in recent years has attracted regional and national companies such as David Weekley Homes, Fischer Homes, Lombardo Homes and Ryan Homes, all with the heft to pick up pieces left by smaller competitors.
“Any time you go into a new marketplace, there’s risk associated with it,” said Michael Luewke, president of the Indianapolis division of Houston-based David Weekley. “But we saw it as a growth potential. In the Midwest, it was one of the better markets we could get into.”
To be sure, David Weekley and the other new arrivals are building in scores of residential developments surrounding Indianapolis and helping the local housing market to rebound from the worst recession in a generation.
The housing collapse that began in 2007 and lasted at least through 2011 claimed
victims including C.P. Morgan Communities LP, Davis Homes and Hansen & Horn Group Inc.
They left a glut of land through bankruptcies or foreclosures, much of it relatively cheap due to the dearth of home building during the downturn.
“In 2009 and 2010, there were a lot of distressed properties,” said Brad Kriner, president of the Indianapolis arm of Fischer Homes, headquartered in Erlanger, Ky. “We were able to come in fairly quickly and gain scale that way.”
Most of that property has been purchased as home construction begins to show signs of life. Single-family building permit filings rose 35 percent in the nine-county area in July, the 13th straight month of year-over-year increases, according to the Builders Association of Greater Indianapolis.
The trade group said 500 permits were filed in July, up from 370 in July 2012. Year-to-date, filings have risen 27 percent from the year-ago period.
Builders filed nearly 4,200 permits last year, a steep decline from the peak of 13,000 reached before the housing bust. Still, BAGI President Steve Lains said the relative stability and affordability of the local market have helped attract outside builders.
“We overbuilt, but we weren’t as overbuilt as other markets were,” he said. “And we didn’t ride the huge highs in home values.”
Ultimately, Lains said, the home buyer benefits from the competition created by more home builders.
And much of that competition now is from out-of-state home builders. Of the top 10 builders in the Indianapolis area, according to number of permits filed, only three—Arbor Homes, Westport Homes and Shoopman Homes—are based in Indianapolis, according to the latest IBJ statistics.
Arbor is the area’s second-largest home builder, behind Michigan-based PulteGroup Inc., but not by much. In 2012, PulteGroup filed 533 permits compared with Arbor Homes’ 521. Westport Homes ranks fifth and Shoopman Homes 10th.
The area’s other largest home builders include California-based Ryland Homes; Atlanta-based Beazer Homes; Columbus, Ohio-based M/I Homes; and Kentucky-based Drees Homes.
Headquarters: Erlanger, Ky.
Entry in market: January 2010
Initial developments: 12
Current developments: 29
Locations: Avon, Carmel, Fishers, Geist, Greenwood, McCordsville, Noblesville, Westfield, Zionsville
Homes to be built this year: 250
Local revenue (2013): $100 million
Founded in 1980, the privately held home builder arrived in Indianapolis in late 2009 and has grown to become the area’s eighth-largest, according to permits filed in 2012.
It started building in 12 communities and has more than doubled that number to 29 in surrounding cities and suburbs, mostly to the north.
The fast-growing company entered Columbus, Ohio, in 2008 after buying subdivisions from retreating builders. Fischer used the same strategy to initially establish a foothold in Carmel, Westfield, Zionsville and Avon, and has branched out from there to Hancock and Johnson counties.
Fischer expects to close on more than 300 homes this year and achieve sales of $100 million, Kriner said.
“If we would have had to develop land, it would have taken much longer and many more dollars,” he said of the company’s Indianapolis growth.
Fischer focuses on the mid- to upper-level market, with an average price point of $400,000.•
Headquarters: Shelby Township, Mich.
Entry in market: January 2013
Initial developments: 11
Current developments: 16
Locations: Avon, Fishers, Fortville, Greenfield, Greenwood, Indianapolis, McCordsville, Plainfield
Homes to be built this year: 20
Projected local revenue (2013): $7 million
The latest entry to the market is Lombardo Homes, based in the Detroit suburb of Shelby Township. It arrived at the start of the year.
Lombardo is building in Geist Woods Estates, an existing development near Geist Reservoir where it is buying the 34 remaining lots. Later this month, it’s set to open a model at Oak Park in Plainfield, where it’s purchased 10 lots from several smaller, custom-home builders.
Ultimately, Lombardo is set to build in 16 neighborhoods this year.
The company’s local division is led by industry veteran Ed Hackett, who most recently spent 12 years with Centex Homes before it was purchased by PulteGroup.
“We were able to accumulate some lots in a short period of time,” said Hackett, referring to the land held by bankrupt competitors.
Lombardo prices range from $400,000 to $600,000. The company plans to build 20 homes this year and to increase the number to 75 in 2014.•
Headquarters: Reston, Va.
Entry in market: October 2009
Initial developments: 10
Current developments: 14
Locations: Bargersville, Brownsburg, Carmel, Fishers, Greenwood, Whiteland, Zionsville
Homes to be built this year: DND
Projected local revenue (2013): DND
Ryan Homes, a division of publicly traded NRV Inc. in Reston, Va., entered the local market in 2009, with lots in 10 subdivisions it took over from C.P. Morgan.
Morgan, which had been based in Carmel, was one the area’s most prolific builders, constructing more than 25,000 homes in 26 years in business.
Ryan started out locally by offering homes in the $90,000 range on most of the roughly 800 vacant lots it acquired in Greenwood, Westfield, Brownsburg, Noblesville and Franklin Township.
The company is building in 14 subdivisions in communities ranging from Carmel to the north to Bargersville to the south, according to its website. Prices range from $130,000 to $380,000.
Ryan Homes executives did not return phone calls seeking comment on the company’s performance in the Indianapolis area.•
David Weekley Homes
Entry in market: April 2011
Initial developments: three
Current developments: eight
Locations: Avon, Noblesville, Westfield, Zionsville, Saxony near Noblesville, Village of West Clay
Homes to be built this year: 100
Projected local revenue (2013): DND
The Houston home builder got its start in Indianapolis by teaming with now-defunct Estridge Group in 2011. Though the two are no longer affiliated, David Weekley Homes has become one of the largest builders in the area, ranking 10th in 2012 in permits filed.
The company began by building in Anderson Hall in Fishers and Heritage Hills in Brownsburg, both Estridge developments. David Weekley Homes since has expanded to eight subdivisions, most notably Rock Bridge in Zionsville, the Village of West Clay near Carmel, and Saxony in Fishers.
“The local guys took a bit of a pounding,” Luewke said of the company’s decision to enter the market. “We hadn’t been in the Midwest before, and we were trying to grow our business.”
Luewke declined to divulge sales figures but said the company expects to double the amount of homes it builds this year compared to 2012. Last year, the company closed on 41, according to IBJ statistics.
David Weekley prices range from $290,000 to $600,000.•