[treis]

>And I realized that to call these businesses “homebuilders” is misleading. It’s striking how little of their business has to do with, well, building. For instance, here’s D.R. Horton in 2023: “Substantially all of our land development and home construction work is performed by subcontractors.” Here’s Lennar in 2023: “We use independent subcontractors for most aspects of land development and home construction.” I suspect most of the other big guys would say something similar. These aren’t builders, they are financiers that borrow cheaper than real developers and use that cheap credit to speculate in land, hiring contractors to do the work. They are, in other words, middlemen.

This is pretty far out there. They are the general contractor and have substantial value add to the project.

Most of the rest of the article is misunderstandings like that.

[schlauerfox]

Don't forget the Lennar tax they impose permanently on the land deed (runs with the land) they sell you you pay each transfer. https://labusinessjournal.com/news/lennar-forces-donation-on...

[burnte]

Never heard of this, and I'm glad I know now. I'm putting this right under HOAs as things to avoid at all costs.

[BenFranklin100]

This was a poor article. Stoller reveals his ignorance of the industry. The GC is far from some middleman. They are the one that coordinate all aspects of the construction, from the digging of the foundation, the rough-in carpentry for the frame of the home, the electrical work, painting, roofing, and everything in between. No single craftsperson could be versed in so many trades, so of course they use subcontractors.

[vundercind]

The structure of neighborhoods I’ve seen pop up in the last couple decades (maybe also earlier, I dunno) is that of a neighborhood developer who farms out the work of building the houses to (usually) a few select other firms, which do the actual GC work and sell the houses, having bought the lots they’re building on from the owner of the neighborhood. The neighborhood developer is mostly in land speculation, they don’t GC the building of houses. IDK if such outfits bill themselves as “home builders” in some contexts, but it wouldn’t surprise me.

[allturtles]

If you're talking about developing an entirely new neighborhood, that involves a lot of work beyond just buying the land, carving it up into lots with a pencil and then selling them for a profit. They have to survey and plan and layout the neighborhood, including the lots, roads, drainage systems and any common areas. Then they have to get all the necessary approvals from the local government, which typically includes drainage studies, traffic studies, school impact studies, architectural reviews, discussions with residents who live on adjacent properties, etc. This often involves multiple rounds that requires revisiting the original design. Then they have to actually get all the infrastructure built out to the point where homes can actually be built on the lots (roads, sewers, drainage ponds, sidewalks, land grading, etc.).

[mikem170]

And they build them for maximum profit, with nothing besides cookie cutter houses, each with a new tree out front, and nothing else unless you get in the car to drive to the nearest gas station or plaza with a chain restaurant or big box store.