I look around at gatherings and can’t help but notice the number of reading glasses and/or bi-focals that are now appearing on the faces of my friends and co-workers. My favorite “look” still resides with Bob O’Shaughnessy and the latest pair of reading glasses that he has stolen from his wife. With the passage of time, dealing with the struggles of nearsightedness or farsightedness becomes more and more frequent and something that I undoubtedly will have to deal with soon. While either can be challenging, I will tell you they are easier than dealing with shortsightedness.
We issued our quarterly earnings recently, my third earnings release since becoming CEO, and I am still amazed at investor obsession with the 90 days just past and the 90 days ahead. Homebuilding is a business where it can take six months or longer to deliver a home and 18 to 36 months to deliver a new community. Yet, I routinely watch investors fixate on 90-day movements as if were the latest episode of Game of Thrones. For example, we spent hours talking about a 2% change in sales pace for the second quarter, an outcome that was impacted, in part, by four communities…which were already closed.
As the ultimate owners of a public company, I fully appreciate that investors can focus on any point along the timeline that they chose, but as managers we have to keep our eyes cast further down the road. Case in point, investing in land. There has been on ongoing rush among builders to expand market share among entry-level and first-time buyers with many companies snapping up lower cost lots in far out submarkets. These communities can work well, but they are also likely to be the ones hit first and hardest when the housing cycle slows.
You have heard me say that I see an opportunity for us to be more balanced in terms of the customers we serve. Currently, well over 40% of our business is serving move-up and second move-up (luxury) homebuyers, including 47% of the homes we delivered in the second quarter. This buyer group has always been core to our operations, but overweighting our business too far toward any single segment can create risks as buyer groups behave differently as the housing cycle progresses.
Equally important, we may be missing opportunities to further grow our business and increase share within the markets we serve. In general, and certainly in today’s hyper-competitive environment for trade resources, having greater local market scale is critical to running a successful homebuilding operation. I believe an outcome of balancing our business will be increased local market scale.
Consistent with earlier comments about time, rebalancing our portfolio in any sort of meaningful way will take years to accomplish. Further, executing such a shift will only be done where we can find high-returning projects in which to invest. In other words, we will maintain the disciplined land investment process that has served us well over the past six years.
And finally, the answer is no, I do not require reading glasses…yet.
PulteGroup Ranks #75 on the List by Great Place to Work® and Fortune ATLANTA, April 12, 2021 – PulteGroup, Inc. (NYSE: PHM), the nation’s third largest homebuilder, today announced it has been named among the 2021 Fortune 100 Best Companies to Work For® by Great Place to Work® and Fortune, ranking #75. This is the first time PulteGroup has been named to
Congratulations to Field Manager Robert Todd at our Dallas division on 47 years at PulteGroup! Robert’s passion and commitment to our customers is truly best in class. “Robert, what can I say but thank you for all you do, most of which is out of sight and without self-promotion. The pride you have for your