Buyin' Ryan: Mega-builder claims 24% of home market
Ryan Homes offers the region-hopping "Belvedere" model for around $280,000 in the Holly Hill development in Greene County.COMPUTER RENDERING COURTESY RYAN HOMES
Just when you thought local builders were going to get the last laugh after the first national mega-builder entering the Charlottesville market failed to sell two of its big, high-end projects, Ryan Homes has come back in a big way. According to statistics from the Charlottesville-Albemarle Association of Realtors, Ryan now builds nearly one out of four of the new homes sold in the Charlottesville area.
At a time when local stalwarts like R.D. Wade Builder and Church Hill Homes have fallen by the wayside, Ryan's 24 percent market share of all new residential construction in Charlottesville and its surrounding counties is by far the largest of any builder in the area.
How does Ryan do it? Economies of scale.
"They're like Wal-Mart," says Keith Davis, a local realtor and real estate commentator. "Since they are a big national company, building homes all over the east coast, they're able to buy their materials in bulk."
This lets Ryan, to use the the pitchman vernacular, pass the savings on to you. Davis says this approach, unprecedented in the Charlottesville area, has allowed Ryan to be wildly successful selling mid-range homes to first-time home buyers.
"With Cherry Hill in the City and Holly Hills in Greene County, I've never seen anything sell as fast as those sold," says Davis. "They hit a market nobody had reached and allowed people to live in a newly-constructed home at an affordable price."
Additionally, Ryan's keeps its overhead low by offering few customization options in any particular home. Ryan's designs are generated from the central office in Reston, and then those designs are built in multiple locations across the country.
For example, the Belvedere model, one of the homes for sale in the Holly Hill development, is a 1,998-square-foot, two-floor, four bedroom, two-and-a-half bathroom home available in the "high $270s" according to Ryan's website. That same Belvedere model is available at the Estates at Port Potomac in Woodbridge for around $330,000 and in the Villages at Urbana near Frederick, Maryland for around $370,000.
Still, while potential homebuyers get a bargain, local subcontractors lose the business.
"Ryan doesn't get their building materials locally; they don't use local labor," says Davis. "They're a self-contained operation that brings everything in from the outside."
Still, plenty of demand exists for local builders and their subcontractors. According to Davis, the reason Ryan Homes has been so successful selling budget-rate homes is the same reason that their more expensive homes have yet to achieve the same level of sales success.
"As you move up the luxury chain," says Davis, "buyers become more discriminating and they want more decision power. For instance, [Charlottesville-based] Gaffney Homes will take you down to the quarry and let you pick out the very stone that they'll use for your granite countertops. With Ryan, those countertops will probably be extra, and you get only four or five options."
Gaffney CEO Mike Gaffney did not return the Hook's call for comment, but that difference in customization options would explain why pricier developments like Ryan's dwellings in the golf-course community of Old Trail Village (in which Ryan originally bought up much of the land and sold a total of two houses), and their Kenridge development near Farmington Country Club did not command the same demand as the company's less expensive projects.
"When you're steps away from Farmington," says Davis, "homebuyers are not going to want to live in something that is mass-produced. They want something that is particular to the area and something that they can make unique to themselves."
Neither the local Ryan representative nor a national spokesperson returned the Hook's call at the time of this post.
36 comments
For those of you asking for data to support this article, here is the link to the blog post that started this discussion with Lindsay. If readers have additional questions about this data, please let me know, and if it is available, I'm happy to provide.
Keith
I would much rather own a home with character and also live in a neighborhood with character. These same ole same ole boxes lined up "one after the other" style, in a place where developers have bulldozed the trees away just don't look well. There are so many other tasteful options, even in the same price range.
You're welcome, Patrick. Glad to be of service...
Natural Selection is a beautiful thing, is it not?
Self-righteous babble will only get you so far...
To sum up Mr. Deer "OMG the world is/has going to hell"
...Great, thanks for the advice, now I will go and do something with my life.
LA752;
So the DIA and NGIC are going to be the financial godsend that will save NVR's Holly Hills, eh? Great, just what we need more of: More money blown on the Military-Industrial Complex and the minions they employ. All those folks, once they get a look at the beautiful and wholesome Holly Hill development will troop like lemmings over the sales office and sign up for 30 year mortgages, along with the folks from GE (how low is that share price again...thinking of bankruptcy, you say?) and UVA's Researh Park (yes, just think of all that government lucre just flowing into the local coffers). Banking on a bankrupt government and bankrupt multinationals to keep the local economy going doesn't seem to be a winning strategy to me, but then I'm not educated in these sorts of things so perhaps I am grossly mistaken. Perhaps I should just be more optimistic, and not pay attention to the fact that i live in a country (and state) with rapidly rising unemployment with a Ponzi scheme based economy and clueless population who believes that things are 'bottoming out' and 'will turn around real soon.'
Yeah, that's it. I better run out and buy one of those great deals because all the real estate agents agree that now is a great time to buy and I better get a house now before the prices go back up and I'll be PRICED OUT FOREVER! Too bad I can't get a Liars Loan or one of those No Money Down, Cash Back At Closing deals that were prevalent just a few short years ago. I really regret not getting a crazy, adjustable rate mortgage that I had no hope of ever repaying. Yes, you are quite right. The American Dream is coming true right now for so many first time home buyers. But you know what the Late, Great George Carlin had to say about The American Dream; You have to be asleep to believe it.
Pete Deer
I agree with Jim T's comment: considering the Hook put the blurb on the cover, one would think they can give an explanation where 24% actually comes from. The 24% number refers to the last half of 2008. I have to agree with Greg that one has to be really careful using MLS to quote market share as I've seen staggering numbers of Ryan Homes sales being reported to MLS months and months after the actual SOLD dates or NOT reported at all. For example look at Westhall in Crozet... MLS is still missing more than half of the Ryan Homes SOLD units in that neighborhood.
Some of the new homes are built very cheap, you can take a box cutter cut through the vinly siding and then use the same box cutter to cut through the blue board insulation/wall, and then just cut through the final layer of sheetrock and you are inside. Most new "affordabable" homes are built very cheap.
Wait a second...I have to check something...Am I on The Hook website, or am I reading the Charlottesville Business Journal, which has ads that look like articles?
OOPS! I'm on The Hook's website, which must be having such a slow day that this is what's passing for news--an advertisement.
How about some news details? Ryan may own 24% of the local market share...but how are sales going? How far down are they this year over last year?
Who's buying a house right now? Is Ryan subsidizing downpayments? Offering lower mortgage rates than banks, the way luxury builder Toll Brothers does?
Gaffney and Ryan won't talk to you, so you turned to a Realtor. So why aren't there any sales statistics here?
Perhaps Derrick's comment is theoretically possible but...wouldn't it apply to ANY home built with a vinyl siding exterior - not just new "cheap" homes?
It's not accurate to say that Ryan does not buy locally. In fact, they work with a number of local contractors and suppliers in their communities. In a recent trip through Holly Hill, I saw Allied Concrete, Van Der Linde Containers, and Virginia Asphalt Services.
Why would anybody cut through walls and siding with a box cutter and climb inside a home when they can knock a door window out, reach in, unlock the door and enter? It's not rocket science to figure out which is quicker and easier when burglarizing a home. :)
@FDR - I think that is clear that you've never actually driven into Holly Hill however I do so pretty regularly. There are about 9 or 10 homes under construction right now and over 30 homes already completed.
Robbie, I drive by Holly Hill on 29 all the time. Its been under construction for around 2 years, construction has winded down - not much new happening and they've cut the prices in half.
I'll drive thru it next time, but I doubt there are 30 homes there, maybe 20 and it'll be interesting to see how many are occupied.
FDR - Don't just drive BY it. Drive INTO it. You'll be surprised.
BTW, the first home was completed early last year so everything you see there has happened in just over a year.
It's pretty easy to see that all homes are occupied if construction is complete.
I agree with "nope", it's not for everyone, but it certainly must appeal to someone.
to: Sick of Local Rambos
Its not a point of why someone would do that. The fact that it can be done is a testament to how shoddy these "stack-a-shacks" are.
to: anybody
Doesn't anyone find these kinds of developments and developers to be truly horrid? It is sad to see an area like Charlottesville that prides itself on the beauty of its heritage and natural landscape, be slowly encroached upon by these kinds of places.
These places are just plain tacky. Is this the group that placed a string of such gems on the outskirts of Historic Gordonsville? Builders and developers can do better. Sorry, they look cheap! Where has the creativity and imagination gone?
JPCL and Nope, the reason they built these in Greene county is it is rare for the Greene to not approve a project and the standards required of builders are lower. Lately Greene has turned down a few projects but there are still some huge ones that are approved but not yet built.
Only mass sterilization of the populace can end sprawl.
It's always a comfort when DOD moves out of one's non-taxbase.From Ivy road to Ruckersville. The Ashbury group's commputer models tell them that it's time to ramp up production on, among other things,the .338 Lapua. Are they trying to tell you something about sprawl, Davey? I sincerely hope that you adapt to it as readily as I did. Considering the fencing efforts of your university over time, the odds in Vegas on such are way down.
Ryan Homes. You mean to folks with the abandoned office on the Downtown Mall? Selling ridiculously overpriced homes miles from any job centers or public transportation (I'm referring to the Holly Hills project). Yeah, I've been by that place, and have driven around it as well. Most of it consists of paved streets with curbs and mostly empty lots. There are about 30 or so houses completed and currently occupied, but I am sure the owners of those properties are really happy the the $350,000 they spent a couple of years ago for their badly constructed McMansion are now being advertised to go in the 'mid $200,000s.' Only idiots and real estate shills think of these places as 'good investments' or 'affordable housing.' Why anyone would want to live in a place like that is beyond me. They represent the worst of what occured in the real estate bubble; speculative, no holds barred building of poorly constructed houses in the middle of nowhere while legions of bag holders, all hypnotized by the the likes of Cramer and the Chattering Monkeys on CNBC into drooling, zombie consumer masses put themselves into a life of penury and debt, sure in the belief that "Real Estate Always Goes UP!"
I live in a Ryan Home and LOVE it! I had a wonderufl experience from A to Z and know quite a few other people that would say the same. I will also say for a fact that many of your gripes are untrue. My husband works for a local subcontractor that Ryan uses. He works in Holly Hill (as well as a few other communitties) where I believe there are about 30 houses...30 houses sold in one year is pretty great!
Dear Pete,
You really shouldn't blame Ryan for the devastating housing market. It's a true testament to their product and business plan that they can remain so successful in a time like this.
Anonymous, you have no idea how successful Ryan Homes is, since Lindsay hasn't bothered to offer sales figures.
Having a 24% share of the market? If only four "new construction" homes have sold, that's one house.
Not a big deal.
"So successful"? Not really.
First anonymous, it's great you love your house from A to Z since you'll either be stuck in it for years or when you sell it you're going to face a $$$ loss. Enjoy while you can!
BTW? 30 built houses does not = 30 "sold" houses.
Where are the sales figures?
Ryan Homes sells all their homes before they build them. They do not build Spec homes.
I recently bought a Ryan home in Pavilions at Pantops (right across from the Giant shopping center on rt. 250). The price was very reasonable, and the home looks very nice (over 2500 sq. ft. 4 bdrm 3 full bath ect...).
I'm very pleased with my first home purchase. As the article stated, I think they are excellent for first time buyers, but as you gain more wealth you of course want more customization. I'm very glad they're in the area; however the mess that is rt. 29 was a very bad investment for them. The Pantops community is 2 min from downtown, and I think the decision to buy with the Govt's $8k credit and 4.5% interest rates is pretty much the best investment in this market, and will have been for many years to come.
And to James Huron - I'd be really surprised to see a loss on this home in a couple of years. The recent surge in Govt. spending is going to spark inflation, sending home values upwards. I’m willing to take the risk.
It's also an excellent opportunity to buy a town-home near Charlottesville and then rent out; whether that is to young professionals or graduate students. Charlottesville will always have this demographic, and this opportunity has the potential to be very profitable in the long run.
Choose your Risk :) After all, it’s only $
I too own a Ryan Home and am extremely pleased. It seems to me the actual homeowner's are quite happy :)
According to the Ryan Home's website, the builder has been in business for over 60 years. It has been my experience that companies that remain profitable for that long both 1)Offer a quality product and 2) offer a product that people want to buy. A quick check of their stock performance indicates that Ryan Homes is one of the stronger builders in the country. After reading the company bio on CNBC.com I also found out that Ryan Homes does not purchase land. This discredits the line from the article "...Old Trail Village (in which Ryan originally bought up much of the land and sold a total of two houses". It has been interesting to see Ryan's transition to the area, I'm starting to welcome it.
Wow, it's very interesting to me that everyone is bashing the price drops at Holly Hill. Really? You may want to actually do your research before sharing your inaccurate comments. The prices have actually remained fairly consistent in a climate where others certainly have not! Did you ever stop to think that they added new floorplans to cater to a changing market?? They are not creating the market, but simply serving it- and clearly doing a great job at that.
The American dream is coming true right now for so many first-time homebuyers! Interest rates are at historic lows, homes are more affordable and the value they offer with their floorplans is amazing! No, the materials are not all high-end. If they were, people would be priced out of homes!
Oh, and by the way, I drive past everyday as well and there are 10 houses under construction. That doesn't sound like "nothing going on" to me. It actually is quite impressive right now!
The community should be happy that a builder is doing so well! Unlike many other builders who aren't paying their local subcontractors and are retaining customer's deposits and filing bankruptcy, leaving houses incomplete...that scenario is good for everyone, right?
Oh, and Pete Deer- you must not know the area very well to say that the Holly Hill development is not near any job hubs...Have you heard of NGIC or that little agency called DIA that is bringing 1,000 relos to their new facility only THREE miles from Holly Hill?? And there is GE, The UVA Research Park...these are not piddly establishments- clearly you are not educated on the area.
James Huron, Jimmy, why so bitter? A little research into the company on your end and you would know that the builder does not build spec homes. So 30 sales = 30 Buyers. Considering the success they've seen in neighborhoods like Cherry Hill and on Pantops I'm surprised Lindsay is only quoting 24% market share. Considering the housing market the last 2 years...remaining in business = successful.
Granted the article lacks statistics and is very subjective in nature. By being a responsible reader, you must always do your own research. Judging from your comments and the ever so classy "$$$"-- I'd venture to say you haven't done your research.
Sounds like the Ryan folks called some of their friends and asked them to write in. As for me, I remain unconvinced!
Nope, I think you're right.
LA752, the local realtors association already estimated that only about 30% of those new jobs might provide home buyers because the prices down here are just too high compared to those in the DC area which are dropping due to so many foreclosures (especially for new construction).
Some people make me laugh. Why is it that so many people on this message board want to be experts on every topic and can't just read a story for what it is-information. Maybe they have 24% share, maybe they don't..that can change monthly. Given they don't own large plots of land I would guess they are one of the few successful builders at the moment--smart planning if you ask me. Whether your home costs millions or less than a hundred thousand, it is pretty much built with the same materials and guidelines (not saying they are perfect). The finishing touches are what make it look unique, but it is still concrete, wood and some drywall. Sometimes the price changes reflect those final finishing options too. For instance the current models may now have a lower quality set of kitchen cabinets versus solid maple or don't include that "must have" granite countertop. If you do that with a lot of the items it can change drastically. But let's be realistic, for a long time this areas homes (as well as many other parts of the country) have been overpriced due to the connection to "Jefferson's University", "#1 rating" DC and any other "historic" reason.
I purchased a Ryan home townhouse last year. I am financially responsible and have a mortgage I can handle just fine. I won't say they are the best, but overall I am pleased with what I have. I guess when I was buying a new home I would rather have something new for the prices Ryan charges versus some 1950's Cape Cod with braided wire, little space and tons of work to get it fixed up. You can bash them all you want, but they are running a business and are still successful when many others have not been--and as far as I know they have paid all the people that have worked for them--that can't be said for all of the builders around here.
Keith Davis's stats are a good indication of what is going on. But you have to be careful using the MLS. For example, there have been 118 sales reported at Cherry Hill, only 57 were reported as new construction. For the most part the MLS is very accurate and getting better. It took a couple of years of discussion with Ryan Homes to get their data to the MLS. The accuracy of that data is still an issue. Mostly, now, in regards to what they are selling, not how many.
Here's a "snapshot" of what is occurring right now. These numbers are new construction sales reported to the MLS with contract date of 1st quarter 2009. They have not all closed. Most will. This is Fluvanna, Greene, Cville and Albemarle.
Total new home sales reported 1st quarter 102
Ryan Homes 41 or 40%
BTW That's 41 out of 454 total sales. 9%
Total new home sales reported March 2009 39
Ryan Homes 19 or 49%
I would argue if you are looking for a key indicator of pricing in this market, follow Ryan Homes and maybe now start watching Eagle Construction. If Ryan is dropping prices, sales aren't there. If they are raising prices, well, you know.....
The other reason to follow the leading builder(s)is that ultimately, home prices are determined by land value. After all, when you buy a house you are buying the land. The house just happens to be attached to it. I am starting to see some conclusive evidence of how much an unimproved buildable lot in a subdivision has adjusted across the region. There hasn't been much activity. Most local builders aren't capable of just pre-selling homes on "optioned" lots like Ryan. Its going to take a while to work thru the inventory around here before you see significant speculative building again.
Every homebuilder has a trail of homebuyers behind them that are happy or unhappy. With some, you can switch the builder and the result would be the same.
In my opinion,the first time home buyer is more saavy than ever before in my career. That's good. I'm working on some stats for a WINA appearance tomorrow morning. I think the sales numbers will show that first time homebuying is a large part of what is going on right now. There is value out there if you can find it. I would also argue that any path to some stability in our real estate market is lead by the first time homebuyer. That is, traditional "I can afford what I am buying" first time home buying.
Like it or not, the Ryan Homes business model is working.
Pete Deer, I doubt all those new NGIC employees will want to go to Holly Hill. Many will have children and they'll want to send their kids to Albermarle or Cville schools, not Greene.
Holly Hill in Greene county originally advertised its homes as upper 400's, then mid 400's, then continuing on down to now 240's.
It's been fun to watch them continually change the signs to reflect the prices. They also are selling very slowly. Drive by sometime and you'll see there isn't much there. If they do have 24% of the market, then its because there isn't much of a market to begin with.
These houses all look very similar. They certainly don't have much character. They are usually lined up in rows and placed close together. Wouldn't want to live in one. Too plastic looking.
JPCL, I would use words like "truly horrid" to describe child abuse and mass murderers. It seems a bit over the top for affordable homes along a major highway.