Florida home builder sees big differences between coronavirus and the Great Recession

Seven questions with Steve Kempton, president of home builder Taylor Morrison’s Florida operation.

Sales of newly-built homes fell as much as 85 percent at the end of March, according to industry reports, though they have rebounded in recent weeks. How bad is it for home builders?

We started March off very strong, but by the middle of the month, demand dropped dramatically. We’re seeing the biggest impact in sales of active lifestyle homes (which largely cater to the over-55 buyer.) They’re typically discretionary spenders, so it makes sense that they will take a wait-and-see approach.

Do you have a forecast for when sales will get back to normal?

That’s the million-dollar question. As an industry we’re better positioned to take advantage of an economic recovery then we were in the Great Recession. Back then, we had systematic issues with home building, and the mortgage industry was a disaster.

As an industry, we’ve been very disciplined about putting the right amount of homes into the market at any given time and not creating a glut of developed lots (properties ready for a home to be built). So I think generally speaking, the industry is set up to recover. When that occurs is anybody’s guess.

Have you had to lower prices?

Generally speaking, we’ve focused our incentives on helping people pay their closing costs.

Is it taking longer to build homes?

We’re trying to adhere to the (Centers for Disease Control and Prevention) guidelines about no more than 10 people. It’s the front end where the contractor builds the home’s shell that has slowed a little. Most of our crews aren’t bigger than 10 anyway, but we’re definitely not putting multiple vendors into a house at once. So we’re seeing a little bit of creep on cycle time, but nothing dramatic.

How much is Taylor Morrison still building?

That’s one of the big differences compared to the last recession. By late ’07 and ’08, all development had stopped. That isn’t the case today. We’ve got millions of dollars of development going right now. We’re building amenities, too. I have a golf course in Sarasota that will open up in May. I delayed it a month because of the crisis, but it’ll open. We’re still putting inventory in the ground. We’re just doing it very strategically and very mindfully.

Are you buying land?

We’re closing on land deals right now that we had under contract, and we’re actively in land acquisition mode. We’re not turning off that spigot. We want to continue to grow in the state and you need land to do that.

Selling homes often involves a lot of paperwork and human interaction. How do you do it in an era of social distancing?

We’ve had a ton of hits on our 360-degree virtual home tours. We’ve had over 650 virtual appointments, and in just the first part of April, we’ve had 60 sales where the buyer never walked into our sales office. We hadn’t really sold any homes that way before April.

We’ve also done more than 100 curbside closings, which are done in front of the house or in front of the closing office. Our closing coordinators wear masks and gloves, and no one has to come inside the office.

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Fast facts

Based in Arizona, Taylor Morrison was created in 2007 when Taylor Woodrow and Morrison Homes merged. The company, traded on the New York Stock Exchange under the symbol TMHC, is the fifth-largest home builder in the country and has 30 communities in the Sarasota and Tampa Bay areas.

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