Just after Hurricane Katrina, national tract builder D.R. Horton started moving into local subdivisions where smaller builders were working and buying up the second and third filings all at once, recalls Central-based homebuilder Dwayne Gafford.
“That created a lot of animosity among the builders and developers,” Gafford tells Business Report in a feature from the current issue. “We felt like we weren’t treated fairly in many cases.”
There’s only so much land available in the Capital Region’s prime locations, especially in East Baton Rouge Parish. When volume builders like D.R. Horton and DSLD Homes buy up large swaths, that leaves even less for the little guys, who often must adapt to survive.
Gafford Builders, which once built at the same entry-level price point that the big guys tend to specialize in, started going after a different market niche by loading up on amenities and charging a little more per square foot. Others found their niche by being more flexible than the tract builders.
Gafford and some of his fellow local builders even found a way to beat a volume builder at its own game by joining forces. They approached Jim Clark, who was developing Twin Lakes Estates in Central.
“They came to me and said that they had been getting squeezed out by the big tract builders,” says Clark, who likes the idea of working with the smaller builders and helping them stay in business.
Clark says he had an offer from D.R. Horton to buy the entire subdivision. He was hesitant about selling to a tract builder, so when the group of local builders committed to buy his lots over time, he decided to go with the locals. So far they have purchased the entire first filing of 49 lots and most of the second filing. Level Homes announced today that it has purchased the third phase of Central’s Twin Lakes Estates, which includes 35 lots, as well as a single lot in the community’s first phase.
Lynda Evans, executive vice president with the Capital Region Builders Association, says she hasn’t heard about many other independent builders working together in the same way. But she says their idea makes a lot of sense.
Having trouble finding lots has probably been the top complaint Evans has heard from builders over the past few years, she says.
“There’s just not a whole lot of buildable land left in East Baton Rouge Parish,” Evans says. “When the tract builders have gone into different subdivisions and bought up lots the original developers had left, it has kind of taken the market away from the independent builders.”
Bardwell Homes is not a tract builder. But Scott Bardwell, who is a developer and a builder, has secured a 68-lot filing in University Club and bought 26 lots from D.R. Horton in Long Farm. He’s also developing his own 43-lot filing in Magnolia Square. Bardwell says he saw the trend of builders taking on large numbers of lots at once and adjusted accordingly.
Bardwell Homes basically does business in one of three ways: Build and develop the project themselves, sell lots to other builders and build alongside the others—which Bardwell is doing in Magnolia Square—or buy lots in bulk.
“I do see it. It just isn’t affecting me that much right now,” he says. “I’m taking advantage of it myself.”
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