As our “Builder of the Year,” home builder, Meritage Homes, has shown expert market research
ability, a dedication to affordable sustainability and a commitment to customer satisfaction.
By Evan Lancaster
With a strong presence
in the home building
industry, Meritage
Homes has maintained
a solid reputation for
building quality homes
at affordable prices. By focusing on current trends
that not only represent style, but also cater to the
aspects of sustainability that today’s homebuyers
are looking for, Meritgae Homes was able to place
itself among the top builders in 2011. Employing
a great market research approach along with
undying home buyer satisfaction are two reasons
Meritage Homes has been selected our “Builder of
the Year.”
This year has included a range of highs and
lows within the housing market. With foreclosures
around every corner, paired with an extremely
high unemployment rate, new home production
hit record-lows for the United States. However,
some home builders have found a formula for
success in today’s rocky market. According to
Chief Operating Officer, Steve Davis, Meritage
Homes, by looking closely at various market
characteristics, Meritage was able to determine
what strategy would work best in a market that
has been primarily driven by resale.
With an estimated nine out of 10 homes listed
as a resale, Meritage Homes focused on delivering
specifics in new homes from room options to
incorporating energy-saving technology that the
resale market could not offer. “Our strategy all
along this year, as well as last year is, ‘How do we
compete against the resale market?’ Having great
location, and also focusing on some things that we
can provide that resale doesn’t provide as far as
certain uniqueness to the house,” Davis said. “Like
pocket offices, different types of bathrooms and
our energy-saving types of features that we can
compete against resale with, but also compete at
a price that’s very competitive against the resale.”
Davis explained that although resale homes might
be a popular trend in today’s market, he sees
significant value in purchasing a new home. He
added that buying new is not only beneficial to
the homeowner’s cost effectiveness, but to the
environment as well. “If you look at the resale
market, most houses were built before the 2006
building code was put in place. So, if you look
at it from an energy point of view, it cost about
30 percent more [in energy costs] to operate a
house built outside of the 2006 code,” he said.
“Today, we’re anywhere from 45 to 70 percent less
than a house that’s built based on the 2006 code.
Compared to resale, we have a huge advantage as
far as energy savings and energy saving costs.”
With sustainable living practices controlling
the market, Davis explained that Meritage
Homes wanted to diversify itself by not offering
cookie-cutter types of incentives. By thoroughly
researching residential energy-systems and
educating homebuyers on the specific cost
reductions in their home’s energy-usage, Meritage
was able to provide homeowners with accurate
data based on real-world energy costs – and still
protect the environment. “We wanted to have
something that would make us a distinction
between actual saving for buyers and not stuff
that just looked good on paper. We wanted to be
able to provide true saving costs. Let’s say the
average house [resale] is $2,000 a year in energy
costs,” Davis continued, “Today, we’re [Meritage
Homes] anywhere from $500 to $800 [a year], for
the same size house, so we wanted something that
would make a huge difference in your pocket, that
you can see every single month.” Since Meritage
remains commited to delivering energy-saving
features in their new home communities, new
home sales have outsold previously opened
Meritage communities two-to-one.
Even with the reputation Meritage has built for
itself over the years,
2011s tough economy has provided little safety net
for home builders to fall into. When approaching
this year, Davis said Meritage advanced with
attentiveness, but maintained a strong work ethic
and remained confident that certain factors in the
market would improve. “We came into the year
with some caution. Optimistic that we would see
a little bit better of a market, but things stayed
somewhat stagnant,” he said. “I think that we
were prepared, as far as our energy-savings gave
us an advantage against the resale market. As a
company, we run very lean; so we are able to offer
a competitive house but also try to stay profitable
in the meantime.” Having survived 2011, Davis
added that it was time to focus on the positive
and prepare for the future, as times get better. He
attributed several factors towards the rebound of
the housing market including a low multiple sale
listing (MLS) inventory, record low interest rates
and overall affordable housing. Considering the
strategies Meritage used to remain a top contender
in 2011, Davis said it was based on strong market
research, carefully selecting when and where to
build. “Most people look at averages; we look at it
a little differently. We not only look at it from the
market, but we’ll take the market and break it down
into 28 submarkets,” he continued, “Basically, we
look at all the submarkets that are doing very well
in resale. We’re able to identify those and look at
factors of what’s selling well, based on that we
try to find land in those areas to try and compete
against those numbers.”
According to Davis, by implementing a strategic
operation and looking at all the different dynamics
in a market, Meritage Homes was present in
13 housing markets nationwide and opened 80
communities and sold over 2,000 homes in 2011.
“From the beginning of the year, to the end of the
third quarter, we’ve sold about 2,600 houses," Davis
mentioned. He also explained that Meritage plans
to carry the same work ethic and market research
philosophy into 2012. However, he added that there
is always room for improvement. “Our plan is to
continue to replace close-out communities that we
have in each one of our 13 markets,” he explained,
“Also, we’re entering new markets; we just entered
the Raleigh-Durham/North Carolina market, and
we have some other markets that we have on our
radar. And we plan to continue to improve on our
energy-savings to try to bring even more to our
customers.”
Reflecting on an eventful year in 2011, Davis said
there are some key points to keep in mind going
into 2012, and beyond. “In tough times you have
to have people that understand the business real
well and who are prepared to operate in a down
market,” he continued, “We focus on having the
very best sales people, the best land acquisitions
people and that we’re paying them the best. So we
focused on upgrading our team throughout this
last year, and I think we’ll continue to do the same
in 2012.” Davis added that being named “Builder
of the Year” is a great privilege. But he emphasized
that the credit should go to all of Meritage’s
employees for all of their hard work and dedication
to delivering a superior product. “We have a lot of
hardworking people here at Meritage that thought
through how we really wanted to have an impact
for our customers and save them money,” Davis
said. “To be recognized as ‘Builder of the Year’ is a
huge honor and a very good accomplishment for
our team, and we’re very honored.”
Evan Lancaster is an assistant editor at
Builder and Developer. He may be contacted at
elancaster@penpubinc.com.
Meritage
