Homebuilders faced a tale of two markets in 2018: strong demand in the first half of the year downgrading to a slowdown in latter months, challenging Orange County homebuilders both public and private.
But not Irvine-based Brandywine Homes, which posted its best year yet.
The privately held Southern California infill specialist exploited strong market conditions to close 161 homes—the most in the company’s 25-year history.
“The sales pace in the first half of 2018 was so great we were able to speed up production of those homes,” said Dave Barisic, vice president of sales and marketing and son of founder Jim Barisic.
The family-owned firm had $125 million in revenue last year—more than double the $60 million a year before and a surge that earned Brandywine a spot—No. 100—on the Business Journal’s annual list of private companies for the first time (see list, starting page 28).
Organic
Its growth wasn’t by acquisition or by trying to grow too quickly, Barisic said.
“If anything, we have grown organically,” he said, on “an increase in closing and deliveries,” bolstered by strong market conditions and attractive pricing.
“Consumers are looking for more affordable housing, which means smaller homes, or getting creative with land planning,” Barisic said.
One notable delivery last year: 131 units at Riverdale, a northeast Long Beach community which “sold like mad.”
This is much larger than the company’s average community, which typically has 30 or so homes. It’s in a part of the city “where there aren’t a lot of new homes being built, and on the northern side of the freeway where it is more affordable.”
A savvy land acquisition team, he said, has supported the company’s margins by finding those affordable areas to build in Orange County, Long Beach and Los Angeles. Homes in Riverdale came in at 1,925 to 2,242 square feet with prices starting in the low $600,000s.
“There is always demand for new housing in Southern California,” Barisic said. “As an infill builder, we are somewhat insulated from market conditions because we build in areas where there isn’t as much competition.”
Infill
That doesn’t mean no competition.
Other privately held builders with active infill development pipelines locally include City Ventures LLC (No. 53 on this week’s Business Journal list) and Melia Homes, both in Irvine, and Olson Homes in Seal Beach.
Public builders also are eyeing infill regionally—Miami-based Lennar Corp. (NYSE: LEN) in particular, which also has a stake in Great Park Neighborhoods developer FivePoint Holdings LLC.
Public company access to funding for land deals often gives them an edge and national name recognition entices homebuyers at the end of the process, too.
Brandywine is “realistic with our land offers. We don’t inflate numbers to get a deal, and then re-trade later,” Barisic said.
“We have a reputation of being conservative, but honest. We’re a family business, and we treat it as such.”
The company has 38 workers, a slight increase over the year prior and a comfortable figure for Brandywine, he said.
Sales slowed at year-end—in line with national trends and rising interest rates which delayed some deliveries—but the builder has “already caught up” in the first half of 2019 and expects a strong year, delivering 175 to 200 homes.
Brandywine recently broke ground on Treviso, a townhome community in Anaheim planned for 22 three-story units of 1,608 to 2,240 square feet with prices starting in the high $500,000s and the first homes ready this summer.
