WATERFORD, MI - Washington Township-based Lombardo Homes has entered into an agreement with Centex Homes to buy Centex's remaining land assets in Southeast Michigan. The purchase could move Lombardo near the top of the pack of residential builders in the region. Centex and Lombardo did not disclose the sales price. Centex announced in April that it was leaving Michigan.
Lombardo will buy Centex's 490 finished lots, undeveloped land and model homes in 14 Michigan communities, said Anthony Lombardo, Lombardo Homes president. Lombardo will also complete construction of Centex's homes in progress.
Macomb County-based Lombardo has been a midsize player in the residential market, with 66 of the region's total residential permits valuing $6.9 million between January and July 2008. The total for the region is 2,196 permits, valued at $370 million, according to Clarkston-based Housing Consultants Inc., which tracks new home construction activity in Southeast Michigan. The company closed 301 sales in 2007. Its growth strategy will involve offering the homes at what Lombardo calls the right price point, in some cases lower than $90,000.
"Our price points on new construction can compete with foreclosures, which is part of our marketing strategy," Lombardo said. The company also offers programs for buyers in a wide range of financial circumstances, he said. "This market works for us. We think we can make it work. We have an investor that invested in us thinking we could make it work," he said, declining to elaborate on who the investor is.
Lombardo Homes will have to compete not only with other new construction, but with the region's supply of existing homes. In Oakland County, there is a 13-month supply of existing homes, according to multilisting service Realcomp II Ltd. There are 18,989 listed in Oakland, and there were 1,393 sales in July.
The glut of existing homes has taken a toll on the region's new home construction. Excluding rental units, new housing permits are off by 48 percent compared to last year, according to Housing Consultants. There were 3,102 residential building permits issued between January and July of 2007, compared to 1,596 this year. Every county in the region had a significant drop, with Genesee County's permit counts falling by 69 percent, and Wayne County's dropping by 34 percent.
Oakland County permits have fallen off by 40 percent, with 357 issued between January and July of this year, compared to last year's 596. But if Lombardo can build some momentum, the company could be poised to significantly increase its market share.
Centex was issued 36 building permits in Oakland County and 123, valued at $23 million, regionwide, according to Housing Consultants. If Lombardo acquires all of them, the builder would be on par with Pulte Homes' 184 permits valued at $38.5 million. Pulte ranks only behind T.H. Marsh, which pulled permits for 320 multifamily units this year.
Source: Mlive.com