These Homebuilders Are Getting Rich Off America’s Housing Shortage

Forbes

Forbes uncovers a dozen new billionaire builders whose fortunes have jumped on the homebuilding industry’s high prices and high interest rates.  Read the full story on Forbes: https://www.forbes.com/sites/richardjchang/2024/09/23/the-homebuilders-getting-rich-off-americas-housing-shortage/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Today on Forbes, the homebuilders getting rich off America's housing shortage.

00:08Surveying a row of three-to-five-bedroom starter homes going up along the recently-asphalted

00:13Addison Drive in Cartersville, a suburb of Atlanta, Tom Bradbury spots an issue.

00:20Poking his brown Brogue leather shoes into the red Georgia clay, he makes a beeline for

00:24a construction crew manning an excavator, telling them exactly where they need to dig.

00:30Bradbury says, quote,

00:40Bradbury is an expert at churning out neighborhoods like this one, called Duncan Farm, with Ford-like

00:46efficiency.

00:48Since 2008, his Smith Douglas Homes has built 304 communities in five states.

00:54Sales hit $765 million in 2023.

00:59Shares of Smith Douglas, which Bradbury took public on the New York Stock Exchange in January,

01:04are up 56% since then.

01:07The 80-year-old Bradbury, who still owns 88% of the stock, is now a billionaire worth $1.7 billion.

01:17It's a terrible time to be a homebuyer.

01:20In 2023, mortgage rates spiked to levels not seen since 2008, and despite coming down in

01:26recent months, remain higher than they've been in more than two decades.

01:31Home prices have also skyrocketed, up 30% nationally on average over the past four years,

01:37while real median household income has stagnated.

01:41Yet given a nationwide shortage of at least 4 million housing units, according to the

01:46National Association of Realtors, it's a great time to be a home builder.

01:51There simply aren't enough homes.

01:53The S&P index of builders is up 57% over the past 12 months.

01:59Shares of the country's largest, D.R. Horton, are up even more over that period, 70%, while

02:05luxury builder Toll Brothers' stock has soared by 96%.

02:10This building boom has led to a billionaire boom.

02:14In all, Forbes has found at least 12 new billionaires, or billionaire families, in

02:19the home building industry.

02:21That includes Bradbury, plus Dreamfinders Holmes' Patrick Zalupski, worth an estimated

02:26$2.3 billion, Perry Holmes' Kathy Britton, worth $2.6 billion, GL Holmes' Itzhak Ezradi,

02:35who with his family is worth $1.9 billion, and three members of Lennar Corp's Miller

02:41family, collectively worth over $4 billion.

02:45The building boom doesn't look like it will slow down anytime soon, especially with both

02:49Kamala Harris and Donald Trump calling for a major increase in new home production.

02:55Plus, builders have a few advantages in this market.

02:59Cash-strapped buyers not only don't need to put additional money into remodeling a brand

03:03new home, but they can often borrow money at competitive rates from the builder's affiliate

03:07lenders or secure other sales incentives to ease the costs.

03:12Bradbury, whose father was an architect who designed government office buildings, sold

03:17his first house to a police officer and a municipal clerical worker for $35,000 in 1975.

03:24That was the start of Colony Homes, which built entry-level residences in Georgia and

03:29North Carolina before Bradbury sold it to KB Home for $67 million in 2003.

03:36Five years later, when KB Home pulled out of Atlanta, Bradbury, frustrated they'd abandoned

03:41the market, started Smith Douglas Homes.

03:45Since then, he's built 15,000 homes, mostly for lower-to-middle-class buyers like autoworkers,

03:51teachers, and first responders, mainly in growth markets in the South, such as Nashville,

03:56Charlotte, and Raleigh.

03:59He's been able to keep the homes relatively affordable because he's gotten the process

04:02down to a science, thanks in large part to a scheduling software called Smart Build System

04:08that updates trade partners and material suppliers in real time, starting from when a home buyer

04:13has put in the order.

04:15After one part of the construction process is completed, the next step can begin the

04:18following morning.

04:20The faster it gets the framers or painters in and out, the faster—and cheaper—it

04:25can move on to the next buyer's new house.

04:28The Smart System has decreased Smith Douglas Homes' build time to an average of just 59

04:33days from start to finish, about 20% faster than most of the other public builders.

04:39For full coverage, and to see the whole list of builder billionaires, check out Richard

04:43J. Chang's piece on Forbes.com.

04:48This is Kieran Meadows from Forbes.

04:50Thanks for tuning in.

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