Home Front

A blog about the economy and the Sacramento-area real estate market.

April 8, 2009
The biggest homebuilder deal ever
Thursday update: Builder Online analyzes the deal on region-by-region basis, including Sacramento.  Also here is our story in the Bee this morning.
"Surprise" hardly catches the moment of hearing it. Like others, I have heard for a year rumors about this big builder going under or firms that might merge for the next round of home building. But everyone I talked with did not expect it would be Pulte Homes of suburban Detroit (Bloomfield Hills, stock ticker PHM) and Centex Corp. of Dallas (stock ticker CTX).

Chances are high if you bought a house anywhere in Sacramento, the East Bay, or the San Joaquin Valley from Bakersfield it was a Centex or Pulte deal. The two builders combined built 15.1 percent of all the homes sold in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties since the start of 2005. That's from Hanley Wood Market Intelligence and so is the following breakdown by year:

               Pulte*                   Centex
2009**      58                          35
2008        259                        503
2007        499                        669 
2006        550                        768                       
2005       1,289                       606  

* Includes Del Webb sales
**January and February

That was then. When the deal is closed as expected by the third quarter of this year, the two will be one company - the biggest home builder in Northern California, says the Folsom group's Greg Paquin. Paquin puts forth a theory that this is a big sign of emerging stability in the housing market. "It means Pulte feels confident in the asset value of Centex. We're at a point in the market where you can value those assets and make a fair estimate the company as a whole.A year ago you coudln't do that because the value of the land was still in free fall."

The new combined company will be named Pulte.

Both came to the capital region in the early 1990s and reaped that huge boom that began slowly about 1998. They concentrated on the region's fastest-growing markets - which turned out to be some of the fastest growth spots in California - Lincoln, Elk Grove, Roseville, Natomas, Rancho Cordova. Both made money like no tomorrow until the market crashed. They lost billions the last two years, erasing all the previous profits. So one day a couple months ago, according to the AP report, the Centex CEO picked up the phone and called Pulte's CEO to talk. The rest is history. More on the two in tomorrow's Bee.

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