A few dozen well-capitalized, privately-held powerhouse homebuilding operators face a best-of-both-worlds strategic inflection point in early 2024.

With their agile DNA, they can seize a competitive upper hand among much heftier national public homebuilders, outmaneuvering them through operational nimbleness, business cultures of capability, and customer focus.

At the same time, these private heavyweights can also flex financial muscle enough to move decisively on land investments to ignite growth. They're buffered somewhat from the day-and-night anguish and personal guarantee risks the bank-lending-reliant operators face in these days of tighter credit and higher borrowing costs.

It's a private homebuilders' version of a champagne problem, a predicament they would choose any day over challenges such as falling demand or some other source of economic dislocation.

In that context, Perry Homes' announcement last week it will expand its operations – almost synonymous with Texas's own special brand of market-rate, ground-up residential development and construction dynamism – to Florida, after nearly 60 years of striving and thriving in the Lone Star State.

According to a media release:

The homebuilder will focus on the Tampa, Orlando, Southwest Florida, and Jacksonville areas. Perry Homes will break ground on its first homes this Spring in Southern Hills, just north of Tampa, a development by GreenPointe Developers. In mid-2025, Perry Homes will begin building in Berry Bay, an Eisenhower Property Group community."

Driving the expansion – to hear Perry Homes CEO Todd Chachere's view of it – are two interwoven forces. One springs up internally as part of precisely who Perry Homes is, what it does, and where the organization is in its lifecycle as an organization.

The other, of course, is the alignment of economic, household, and other market characteristics – such as its unmet need for new, architecture-forward, move-up homes at competitive prices – in the prospective geographical expansion market itself. Going along with that – consistent with Perry Homes' reputational prowess not only among homebuyers but also among trusted residential developers, construction trades, and materials suppliers – is a robust residential neighborhood development business community.

Beginning with a strategic moment of truth just over a decade ago, Chachere – who cut his teeth working for Perry Homes right out of grad school in October 1994, and took over as CEO in 2022 – offers a first-hand look at what brought the Perry Homes team to its decision to create a Central Florida springboard to replicate its top-10 ranking in each of its operating markets standing in Texas. What's more, one might easily infer that the same playbook could kick into gear for expansion farther up into the Florida/Alabama Panhandle and Southeastern markets like Georgia, the Carolinas, and Tennessee.

Here are a few excerpts of a high-level conversation we had yesterday, focusing on Perry Homes' Florida prospects and beyond.

The Context: Perry Homes DNA

Todd Chachere

We're the largest privately-held woman-owned homebuilding company in the country and are very proud of that. We were founded back in 1967 by Bob Perry, who died unexpectedly in 2013. His daughter, Kathy Britton, came in at that time, and we took a negative situation and turned it into a genuinely positive opportunity for us to challenge ourselves and think about what we wanted to be and where we wanted to go at that time.

We set up a strategic plan to, Number 1, grow in Texas. At that time, we were only building in Houston and San Antonio, and we had a tiny market share in San Antonio. We decided to expand into the Austin and Dallas markets and did so beginning in 2013. No. 2, we set a goal to be a top 10 builder in every market. We've accomplished that in San Antonio, Austin and Houston, and we will be there this year in Dallas, assuming everything goes as planned. We're very excited about what we've accomplished. We just got to a point of, 'We've got an incredible owner, and we've got a great group of employees, and it was time to spread our wings and introduce our tradition of excellence to the Florida market.' We take a lot of pride in what we do. We do consider ourselves a move-up builder. We build across all different lifestyles and sizes, and hit a pricing range in January of high-$300s up to $1 million-plus."

Market Alignment With Perry Homes Strengths

Todd Chachere

Our philosophy is to double-down focus on architecture, putting quality in our homes, and providing exceptional customer experience. We think that that plays in all markets, and when we started looking around the country, we thought, ‘Where do we want to be, and where would it make sense for that first big step for us?’ When you look at the market dynamics, Florida is very similar to Texas and offers a lot of similarities. Those similarities are not just population growth and job growth, but there's an incredible pool of masterplan developers there that can support a business like ours and form long-term, trusted partnerships. That's what we cater to: Building in an environment and climate like that. What's more, it's a pro-business-friendly state, and we think Florida will continue to be especially healthy on the homebuilding front for years to come."

Balancing Built-To-Order With Spec

Todd Chachere

This balance is one of the things that sets us apart. Although we specialize in move-up, and we cater to and welcome the built-to-order buyer, and that’s about 40% of our business. We will also start a lot – about 60% – of inventory on speculative homes. That's played well for us with our developer partners, knowing that we will be aggressive and have the best of both worlds. We can build volume like the production builders, but we also cater and offer a little bit more on the personalization and the customer experience from that mode of clientele. But we plan to have a Design Center in Florida markets, just like we do in Texas, and we very much welcome personalization of the home. That's big for the price points that we're in. But we have a great team and a curator here, and we believe when we start inventory homes, we do it in a way that we think will appeal to the buyer. We track selections and trends very closely. We feel confident when we start inventory homes, and even within that, as long as we can make the personalization that people asked for, we're willing to try to do that on our inventory homes."

The Perry Homes Culture

Todd Chachere

We have an incredible culture here. We call it our tradition of excellence. We try to be excellent in everything we do. That started with Kathy’s father – and she did a great job of embracing the values he taught us – and we've made a big effort to emphasize and operationalize that in our organization. We work hard but have a very family-oriented culture, and our employees thrive in that environment. It has been a significant aspect of who we are. It meets that tradition of excellence that we talk about, and we drive ourselves to excel."

Land Strategy

Todd Chachere

One of our big areas of emphasis is our developer partners. We go out of our way to do everything we can to ensure we're satisfying their needs and working closely with them. We'll work with them on architecture and we'll do whatever we can so all of their developments are successful, first and foremost. That's one of the things that did attract us to Florida. There are a lot of great developers there, and we felt very fortunate that we've made or been given great introductions to just about all the top developers in the state. We also feel so fortunate that a couple of them have already gone and taken this leap of faith with us, and we've felt like we're close to many others and have some additional opportunities in the works. In a perfect world, we like a land-light strategy as everybody does, but the markets shifted – it's so hard to find a lot. We do our land development. We do it throughout Texas, but we always tell our developer partners, ‘Our first choice would be to be a home builder.’ We often buy land with the intent to flip it to our developer partners to let them take it and run with it. We're pretty nimble in that way. But we do have a super strong balance sheet that we're proud of, and we can go out and compete with the publics when it comes to land buying. We'll develop 25% of our own lots, and we would expect that we'll need to do some similar structure in Florida, but our first choice would always be to build with our great developer partners."

Further Expansion Plans?

Todd Chachere

We've always been very conservative and realistic in our growth. We definitely have our eye on Florida now. But in the long term, from a strategic approach, it certainly puts a flag on the East Coast, where we can envision going north from there or anywhere else around that southeast region. Right now, we're currently dialed in on Florida. Long term, it certainly positions us to expand out of that area easily."