Everything is bigger in Texas, especially the real estate market. California homebuilder Landsea Homes have announced it is moving its Newport Beach, California headquarters to Uptown Dallas. Even while adjusting to a market slowdown, price cuts, mortgage rates buydowns, and a reduction in headcount, moving to Texas was the right move, according to Landsea executive.
Good Move
Cutting costs and boosting their Texas presence could help their bottom line, justifying a bold move in the current market. Not only will the move offer easier access to a more resilient market, but it will also reduce costs. In addition, since home is where your heart is, the relocation also allows Landsea to be closer to the market they want to grow in and reiterate their commitment to Texas, according to a recent article.
Solid Growth
2022 was a year of solid growth, with total revenue of over $1.4B, a record for the company. However, the second half of 2022 showed signs of waning demand, prompting a surge of innovation and out the box thinking. Seeing a contagion of caution spreading among potential homebuyers, Landsea CEO John Ho saw that making a bold move was an easy solution.
Answering Market Volatility with Action
Landsea currently builds in Texas, Arizona, Florida, and California. However, Texas is only 3% of the building portfolio, with most of their lot ownership in Austin and San Antonio. With ongoing renegotiations with vendors, suppliers, and contractors, they will be well poised to continue growing and be prepared for a demand surge.
Although market volatility and demand shifts challenge the national real estate market, Texas remains resilient, specifically in major metropolitan areas and their suburbs. That’s why it’s always a good time to look for your dream home, especially with Viktor Taushanov – Mister Frisco. Landsea likely won’t be the last homebuilder moving to Texas. Take advantage of this market and move into your dream home today!
In response to the uncertain demand, Landsea is proactively negotiating with suppliers, vendors and contractors to make sure the prices the company is paying reflect the new market realities as well as Landsea’s increased size and scale, the CEO said. The company is prepared to walk away from land option agreements if they no longer meet its needs, and the homebuilder has reduced its headcount by about 8%, Ho said.
Landsea currently builds homes and residential communities in Arizona, Florida, Texas and California.
Its new headquarters office will be at 1717 McKinney in Dallas, where Landsea has signed a lease for 7,716 square feet on the building’s 10th floor.
In terms of homebuilding, Landsea’s footprint in Texas is relatively small, making up just 3% of the company’s revenue in 2022. The company currently owns or controls 1,087 lots, mostly in the Austin and San Antonio markets.
California made up 35% the company’s 2022 homebuilding revenue in 2022, Florida made up 33% and Arizona made up 22%.
The company wants to boost its presence in the Lone Star State, but changing the geographical percentages will take time, Ho said.
“Texas will come on toward the end of the year, but generally, it will be around the same split (at year-end),” he said.
Landsea’s full year 2022 results:
- Home sales revenue increased 49% to $1.4 billion
- Total homes delivered increased 45% to 2,370 homes
- Net income of $73.6 million, or $1.70 per diluted share
Landsea’s Q4 2022 financial summary:
- Total revenue was $426 million in Q4 2022, vs. $398.5 million in Q4 2021.
- New home deliveries were 703 with a dollar value of $417.5 million and an average sales price $594,000 in Q4 2022. This compares to 534 homes with a dollar value of $333.1 million and average sales price $624,000 in Q4 2021.
- Net new home orders were 88 homes with a dollar value of $57.5 million for an average sales price of $653,000 in Q4 2022. This compares to 440 homes with a dollar value of $313.1 million, an average sales price of $712,000 in Q4 2021.
- The number of selling communities increased to 58 in Q4 2022 vs. 35 in Q4 2021
- Total homes in backlog decreased 33% to 670 homes with a dollar value of $380.9 million and an average sales price of $569,000 in Q4 2022, compared to 998 homes with a dollar value of $586.2 million and an average sales price of $587,000 in Q4 2021.
- Total lots owned and controlled by Landsea increased 33% to 11,593 in Q4 2022, from 8,740 in Q4 2021. Of those lots 54% are controlled and 46% are owned.
