Staying Competitive in Today's Homebuilding Industry.

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Staying Competitive in Today’s Homebuilding Industry Deloitte and McGraw-Hill Construction • U.S. Homebuilder Survey Conclusion Taking in the Big Picture
Staying Competitive in Today’s Homebuilding Industry Deloitte and McGraw-Hill Construction • U.S. Homebuilder Survey When Growth is Good, Return on Invested Capital is Superior In the final analysis, the goal of any homebuilder – large or small – is to create economic value. Commanding prices that are greater than the full costs of producing homes is only part of the value equation; the other part is achieving superiority in long-term return on investment. Despite a positive outlook for new housing demand and favorable capital market discipline, our survey underscores fundamental shifts that are harbingers of future industry change: Land is increasingly scarce in desirable markets. Land use regulation is limiting the amount of developable land in many major markets and creating an increasingly capital intensive, complex, and lengthy process for entitlement, in addition to driving up the cost of land. Local is still important in terms of scale but regional and national procurement is growing. Materials procurement is becoming more regional and national, not just local, which means that large homebuilders are reaping strong advantages in procurement. This is a trend that is mounting in scope and effect across the industry. As large builders gain economic advantages in procuring materials, accessing capital and attaining developable land, their profitability and prominence will continue to expand at the expense of small builders. Consolidation is a sure bet. The homebuilding industry is in the throes of consolidation. Large builders will continue to increase market share by acquiring local and regional builders. The merging of large mid-level builders could further alter the landscape and bring new behemoths into the game. In the end, without an easing of new home appeal, home builders have little choice but to grow in order to meet demand. Contact Deloitte & Touche LLP McGraw-Hill Construction Paul Prescott National Tax Managing Principal, Homebuilding Deloitte Tax LLP (714) 436-7148 pprescott@deloitte.com Pete Culliney Real Estate Research Deloitte Services LP (212) 436-5039 pculliney@deloitte.com Burleigh Morton Senior Director McGraw-Hill Construction Research and Analytics (781)860-6842 burleigh_morton@mcgraw-hill.com Anita Gryan Director of Operations McGraw-Hill Construction Research and Analytics (781) 860-6434 anita_gryan@mcgraw-hill.com 0
Page 1 and 2: Staying Competitive in Today’s Ho
Page 3 and 4: In the midst of impressive industry
Page 5 and 6: Who We Surveyed • Homebuilders
Page 7 and 8: Percent of Homes Pre-Sold Staying C
Page 9 and 10: Riding out the Boom What is our pla
Page 11 and 12: Keeping up With the Trends Responde
Page 13 and 14: Using Technology Staying Competitiv
Page 15 and 16: Outsourcing Staying Competitive in
Page 17 and 18: Production Roadblocks How do we dea
Page 19 and 20: Respondents 60% 50% 40% 30% 20% 10%
Page 21 and 22: Reducing Cycle Time Staying Competi
Page 23 and 24: Home Design Designing the Home Do w
Page 25 and 26: Accounting & Financing Accounting f
Page 27 and 28: SG&A Costs as a Percent of Sales SG
Page 29: Staying Competitive in Today’s Ho

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