Local home builders battle the big boys

Dec. 7--Fifteen years ago when you walked through the door of your new home, chances are it carried the name of the local family who built it -- Elliott, Dunmore, Mourier, Lewis or Sweigart.

Such area builders ruled the roost then, when Harry C. Elliott III and Tom Winn battled back and forth to be No. 1 in annual sales.

Today Tom Winn's Winncrest Homes is a subsidiary of one the nation's largest homebuilders, Miami-based Lennar Corp., which battles for No. 1 in the Sacramento region with the biggest builder of them all, Fort Worth-based D.R. Horton Inc.

Folsom-based Elliott Homes, meanwhile, ranks 17th in sales this year -- its 162 home sales trailing far behind nearly 1,000 sales by Lennar, according to an industry market researcher.

Nothing more clearly indicates the corporate takeover of the region's homebuilding business than this: Where local, family-owned companies once dominated, six of every 10 homes sold in the Sacramento area this year are now being built by national production builders -- giant corporations that buy microwaves and dishwashers by the thousands and take cues from headquarters in Texas, Florida, New Jersey or Los Angeles.

That market shift has forced the local companies to sharpen their focus as they attempt to capitalize on what they say are some of their chief advantages: being small, nimble and rooted in communities where they've been doing business for decades.

The growing domination by national companies is an increasingly familiar story. Across the country, big national builders and sizable regional construction firms rushed into the fastest-growing metropolitan areas during the boom years. That is especially true in California, where the firms were lured by a record-setting housing gold rush and where their big bank accounts proved helpful in dealing with the state's strict building regulations.

"When things get drawn out, the deeper-pocket guys have a better chance of success," says Elliot T. Eisenberg, housing policy economist for the National Association of Homebuilders, a trade group in Washington, D.C.

That's hardly to say that local family owned homebuilders -- Elliott, JMC, JTS, Tim Lewis, Dunmore, Parkland, Corinthian, Cambridge and Reynen & Bardis, among them -- are headed toward extinction. Many are coming off some of their most profitable years.

"It's high probability the big private guys are there for the long term," says Rick Baldonado, analyst for Costa Mesa-based Hanley Wood Market Intelligence, a national homebuilding industry researcher.

"They're conservative. They're smart. They're going to play it right."

Still, one local builder sees gains just ahead.

"I suspect the nationals' market share will shrink when the market improves," says Sid Dunmore, owner of Granite Bay-based Dunmore Homes, which is marking its 54th year in the region. "Ours will definitely increase."

Dunmore makes that prediction even though just four corporate giants -- Lennar, D.R. Horton Inc., Centex Corp. and KB Home -- accounted for 41 percent of new home sales last summer in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties, according to Greg Paquin of the Folsom-based Gregory Group. That's up from 28 percent in summer 2005.

Just six years ago, at the start of the boom, Roseville-based JMC Homes was the region's No. 2 builder. Elliott ranked fifth, and Sacramento-based JTS Communities, named for its founder, Jack T. Sweigart, was 10th, according to Hanley Wood.

As 2006 comes to a close, only JMC is in the top 10 -- at No. 10.

National production builders say they're in Sacramento to stay. They aim to build many of the 128,000 homes on the region's drawing board in the years ahead.

But local builders like to cite their own advantages. And experts agree they're real.

"The smaller builders who build good homes and have good reputations, it's like going to a good local hardware store as opposed to going to Lowe's," said Eisenberg of the National Association of Homebuilders.