The two top homebuilders in the Twin Cities will become one when Lennar completes its acquisition of CalAtlantic Homes.
Lennar Corp. and CalAtlantic Group earlier this week announced the $9.3 billion deal to create the nation’s largest homebuilder. The deal may ultimately produce more options to entry-level new home buyers in the Twin Cities.
The combined companies’ revenue will be around $17 billion, and they control about 240,000 homesites and 1,300 active communities in 21 states. Lennar says the transaction is expected to generate annual cost savings of about $250 million.
Lennar has been the biggest builder in the Twin Cities since 2006, according to a survey by the Builders Association of the Twin Cities. Those rankings are based on self-reported revenue figures. During 2016, Lennar closed the sale of 582 homes, 519 of which were single family, for revenue of $262 million locally. Bill Burgess is the longtime Twin Cities president for Lennar. CalAtlantic Homes had more than $190 million in revenue with 503 closed sales in the market.
While the deal is a game-changer on the national real estate landscape, the Twin Cities new-home market is already dominated by national homebuilders and some midsize locally owned companies. The chief effect here may be from cost savings Lennar and CalAtlantic expect to produce.
Stuart Miller, Lennar’s chief executive, in a statement forecast “efficiencies in purchasing, access to land, labor and overhead allocation to a greater number of deliveries.”
David Siegel, executive director of Housing First Minnesota, a program of the builders association, said that assuming such efficiencies happen, home buyers in the Twin Cities could see a better selection of entry-level new houses priced at less than $300,000.
“From a home buyer’s perspective it could be a very positive thing,” Siegel said. “This new enterprise probably has the capability of addressing some of affordability challenges.”
The transaction is subject to approval by Lennar and CalAtlantic stockholders and is expected to close early next year.
Following Lennar and CalAtlantic, these were the top 10 homebuilders in the Twin Cities metro in 2016:
3. PulteGroup, $177 million revenue, 373 closings.
4. D.R. Horton Inc., $155 million revenue, 350 closings.
5. Mattamy Homes, $110 million revenue, 280 closings.
6. Hanson Builders, $81 million revenue, 114 closings.
7. Robert Thomas Homes Inc., $69 million revenue, 127 closings.
8. M/I Homes, $57 million revenue, 144 closings.
9. Gonyea Homes, $52 million revenue, 59 closings.
10. Eternity Homes, $50 million revenue, 100 closings.