Building the American dream is home sweet home for The Ryland Group. The homebuilder, founded by James Ryan and Bob Gaw in 1967, constructs single-family detached homes, as well as attached condominiums for entry-level, first- and second-time move-up, and retired buyers. Ryland has constructed more than 295,000 homes in hundreds of communities around the US. The average price for a Ryland Home is around $250,000. The company offers services that span the homeownership process. Homebuyers can select custom home finishes at a My Style Design Center. The group also provides mortgage financing, title and escrow, and insurance services.
The Ryland Group's financial services unit focuses on retail mortgage loan originations, including conventional, Federal Housing Administration (FHA), and Veterans Administration (VA) mortgages. More than 99% of the loans originated by the subsidiary are for homes built by the company.
But Ryland's main focus and biggest revenue generator (some 97% of sales) is its homebuilding segment. Homebuilding is divided into four major geographic regions: North; Southeast; Texas; and West. Ryland focuses on diversification, with no more than 10% of its capital resources allocated to any given geographic market. The strategy helps minimize vulnerability to economic and market fluctuations.
Following several years of solid earnings growth, Ryland began to feel the effects of declining demand for new homes in 2006. Since then Ryland's revenues have been on the decline and the company has reported losses. An increase in foreclosures created an oversaturated housing market. That, coupled with a tight credit market, lagging consumer confidence, and high unemployment rates, forced national housing demand and home prices down.
In response to the downturn, Ryland made several changes to its operations. It cut its workforce by nearly 70% and reduced the number of communities in which it was active (exiting markets such as Northern California, Cincinnati, Dallas, and Jacksonville). Ryland also cut back on its lot inventory and began building smaller, more affordable homes that cater to demand.
The housing market continued its slow recovery in 2011. Ryland increased its home unit sales by 10% that year and experienced a slight increase to its average sales price. Ryland strategically increased its community count by investing in markets with growth prospects. The company is positioning itself for a full recovery in the housing market and an eventual return to profitability. – less