Smaller Builders Developing New Niches

During the economic downturn earlier this decade, many small home builders were swept out of business in Orange County. In their place came larger, publicly held firms.

Across Southern California, smaller builders have found niches allowing them to increase their share of the market. They have taken advantage of lower land costs in the Inland Empire and Antelope Valley, or found smaller, industrial parcels that could be converted to residential, said Russ Valone, president of Market Profiles, a San Diego company that conducts real estate research.

But Orange County, which has among the highest land prices in the nation, continues to be dominated by big builders. The top 10 home builders--all major companies--constructed 49% of all homes sold last year, Valone said.

Kaufman & Broad, the nation’s largest builder, purchased Lewis Homes, a large private builder last year. Valone said similar consolidation can be expected in the months ahead.