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TMCNet:  National homebuilder gets busy on El Paso's East Side

[January 07, 2013]

National homebuilder gets busy on El Paso's East Side

Jan 07, 2013 (El Paso Times - McClatchy-Tribune Information Services via COMTEX) -- El Paso homebuilders, who had this market to themselves for years, are now facing competition from the nation's largest homebuilder.

Fort Worth-based D.R. Horton quietly entered this market two years ago, and plans to expand its presence here this year when it starts construction in the new, huge Mission Ridge master-planned community located just outside Horizon City, and in its own, small Ryderwood Estates in Horizon City.

The company, which operates in 26 states, for the past 10 years has been ranked by Builder magazine as the nation's largest homebuilder determined by number of home sales.

It sold 21,048 homes in its last fiscal year, which ended Sept. 30. It had revenues of $4.2 billion, and a profit of $956.3 million, its financial reports show.

By contrast, El Paso's three largest builders in recent years have each sold between 300 to 400 homes a year.

"D.R. Horton has been successful in many smaller markets where no other national builders operate. We look for markets with a consistent job base and a steady level of building permits, regardless of the absolute level of permits," Jessica Hansen, the company's vice president of communications, said in an email.

The company has operated in Las Cruces since 2004, Hansen reported.

D.R. Horton has sold only 121 homes in the El Paso market in the past two years, including 64 last year, it reported. But it plans to rev up production this year and exceed its modest 2012 sales number.

The company didn't divulge its projected 2013 sales number for El Paso. But it's now building in its 53-lot Ryderwood Estates subdivision near Darrington and Eastlake, and it plans to begin construction this month on 61 lots it owns in Mission Ridge, located next to Eastlake. It also has built homes in the Tierra Del Este and Ventanas subdivisions on the far East Side.

Randy O'Leary, president of Desert View Homes, one of El Paso's largest homebuilders, said it's been many years since a national builder has tried to make a go of it in this market.

"I think out-of-town builders have a hard time competing here because we (El Paso builders) tend to keep prices low, overhead down, and that doesn't always work for their business model," O'Leary said.

But D.R. Horton's Hansen said the company's focus on controlling overhead costs allow it "to be profitable at a lower sales volume in an individual market." The company's national volume of home construction also allows it to negotiate favorable prices for materials and products used in its homes, she added.

Frank Arroyos, immediate past president of the El Paso Association of Builders and owner of Cisco Homes, said having a large national builder with a lot of financial resources makes it more difficult for small El Paso builders to get their slice of El Paso's small market. About 3,300 new homes are built in El Paso in a year, he said.

"It will hurt local builders if they (D.R. Horton) succeed" in El Paso, Arroyos said.

Justin Chapman, president of the Southwest Community Development division of Hunt Companies, which is developing the 3,000-acre Mission Ridge community, where D.R. Horton will build homes along with El Paso builders Desert View and Saratoga Homes, disagreed with Arroyos' assessment. He said this market is large enough for both a large national builder and small El Paso builders to do well.

"I think El Paso builders have done a terrific job of updating their products, and are as advanced in marketing and model home production" as any national builder, Chapman added.

Desert View's O'Leary said having D.R. Horton in this market doesn't change what Desert View or other El Paso builders need to do to be successful selling homes.

"I think the local guys know the local market. We know what people (buyers) are looking for, we know the subcontractors. It's more on their (out-of-town builders) back trying to figure out this market," O'Leary said.

Isaac Castro, 26, who along with his wife bought their first home last summer in Horizon City from D.R Horton, said they had never heard of the builder until they saw its signs advertising its Horizon City area homes.

The size of the homebuilder didn't make any difference in their decision on what home to buy, Castro said. What mattered was the floor plan and quality of the home, which, he said, D.R. Horton won in their eyes.

"Other houses didn't compare," he said. "We saw a difference in the materials and (floor) layout." However, the $155,000 price the Castros paid for their three-bedroom, 1,735 square-foot home was probably more than they would have paid for what local builders were offering, he noted.

Desert View's homes, for example, sell for prices ranging from $97,150 to $205,000.

D.R. Horton's El Paso homes sell for prices ranging from $148,900 to $233,990.

Diana Verdugo, an El Paso saleswoman for D.R. Horton, said a limited inventory when D.R. Horton entered this market, and prices higher than some local builders, probably has kept a segment of El Paso's homebuyers away from the national builder.

D.R. Horton this year will target first-time buyers with homes it will build in Mission Ridge, Verdugo and Jensen. They did not provide price ranges for the company's Mission Ridge homes.

Its Ryderwood Estates development will target "move-up buyers" with homes priced from about $159,000 to about $216,000. The first homes in that subdivision are expected to be completed by the end of February.

Vic Kolenc may be reached at; 546-6421. Follow him on Twitter at @vkolenc Company data D.R. Horton is based in Fort Worth.

-- Builds homes in 26 states.

-- Entered El Paso market in 2011, Las Cruces market in 2004.

-- 21,048 homes sold in its 2012 fiscal year, up 21 percent from 2011.

-- 33 percent of home sales are in South Central region (Texas, Oklahoma, Louisiana, Las Cruces) -- $4.2 billion in 2012 revenues.

Information: ___ (c)2013 the El Paso Times (El Paso, Texas) Visit the El Paso Times (El Paso, Texas) at Distributed by MCT Information Services

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