Will Private Home Builders Cut it in 2011? We Think the Answer is Yes

Something funny's happening on the way to public home builder domination of the low-pulse, anemic housing recovery. Without question, public companies have made big strides, not only in their own operational disciplines but in the way they flex their muscles in the markets they have chosen to fight out the early stages of a new cycle competitively. It's Darwinian reality at this stage for the publics not just to make their numbers, but to make their less-well capitalized private brethren go out of business while they do it. And public companies aren't the only well-resourced menace to the well-being of private home building companies right now, either. Clearly, national political expedience favors saving the banks in favor of saving new-home building capacity, so government will sooner and more emphatically look to support the disposition of the 8 million or so properties in the foreclosure-distressed financial asset bucket than to promote the kind of economic well-being that would lead to demand for new construction. Private home builders, in other words, have cyclical, structural, competitive, and political currents to fight upstream in; it's no wonder so many of them have gone under in the past four years, a loss not only in capacity, but in the character and culture of home building. No one can deny that while publics have leveraged their heft, the patience of their capital, and their growth in professional disciplines to a competitive advantage, many of their home building operational innovations have come by way of private home builder acquisitions along the way.

Click here to view this article from its source.