Michigan Based Pulte, The Biggest in The World?

Michigan based Pulte, the biggest in the world?
The toughest real estate market produces the most resilient builder!

Pulte Homes has just announced the purchase of Centex Homes for $1.3 billion making Michigan based Pulte Homes the largest builder in the country. In every market downturn, public companies have often found that one great way to buy Real Estate is on Wall Street! This deal is a prime example of how to buy land in stock.

What this means to Michigan - Pulte will rank as one of the top land holders in the country. This is excellent for the state of Michigan as jobs and capital will be more likely to flow through our beautiful, if not economically challenged state. It is perhaps ironic that the largest builder would emerge from one of the most challenged building markets of Metro-Detroit. Pulte's growth is encouraging to all of us laboring in the tough local economy.

Bill Pulte – Local Warren Buffett? - Bill Pulte has been the unsung Warren Buffett of the Real Estate world going nearly 50 years without a loosing year (until the past year). His Midwestern roots tend to identify him with age old adages like “I’ve never worked a day in my life, because I love what I do.” He drives a Cadillac, although his wealth could be in the billions. He never locks the door leaving the key under the mat. He has a certain “golly gee” persona and likability that those from wall street and the coasts have never understood. What Wall Street does understand is that Bill wins! He may only have a high school education but his financial winning streaks have been unparalleled. His net worth is greater then that of Donald Trump. His mantra has always been that he wants to be the biggest and the best builder in the country. Today with this move, Pulte becomes the biggest builder at an interesting time to be the biggest.

This move for Pulte is 3 things; product diversification, land play, and a market share grab. In product diversification Pulte has long been known as a move up builder. In Michigan that is the $250K to $400K home. This is a very difficult market to tap with out programs like those offered by Marketplace Homes to get people out of existing homes. Pulte is well aware of these challenges. Pulte is also known for 55 and up “active adult” communities under the Del Webb brand. Centex’s value is in the starter home segment. Typically in a Real Estate turn around the first homes to start selling are the lower value starter houses. Centex dominates this market under the “Fox and Jacobs” brand that provides “minimalist” housing at an affordable price.

The Land Play – By purchasing Centex, Pulte will be able to consolidate the people, the products and systems of Centex. But mostly, Pulte has bought the land. This one move was a quick way for Pulte to buy out hundreds of communities in many states in one fair swoop. This move will make Pulte the biggest owner of American land in the world next to US and state governments.

Market Share – Continuing the mantra of diversification and simplification, the move to buy out Centex offers Pulte the opportunity for continued value creation with trades and suppliers. Pulte will have the largest share of the building market in the country, yet probably not even touch 10% of all homes built this year. This industry still has a lot of room for consolidation and look for other companies to follow Pulte’s lead.

What this means for you – If the big money is buying land, so can you! You might not have the desire to own billions of dollars worth of land, but why not a nice family home that you can enjoy! Pulte has waited over 50 years to make a move like this, how long has your family waited? Are you going to let your children grow up in a 2 bedroom condo when you have worked for and earned so much more? If Bill Pulte has confidence in the market, shouldn’t you?

If you purchase a home from one of our partner builders, Marketplace Homes will agree to a guaranteed lease for up to 6 years on your existing home! Contact us at 248-723-6490 to see if you home qualifies.

Regards,

Mike Kalis
Managing Partner
Marketplace Homes
Office: 248-282-9364
Cell: 734-751-1624
Fax: 248-295-4815
mike.kalis@marketplacehomes.com
www.marketplacehomes.com