Arbor Homes confident of continued rebound in year ahead [The Oregonian, Portland, Ore.]
Dec. 03--Arbor Homes vice president Wally Remmers, speaking Wednesday before a banquet-room full of Arbor subcontractors and suppliers, passed along a cherished bit of advice he once received from legendary Oregon State football coach Dee Andros:
"If you get confused and you don't know what to do and you don't want to admit it, go full-speed ahead and knock someone on their butt."
The last three years has been more about survival than pancake blocks. Even Arbor, the largest, locally based residential developer in the state, scaled back to weather the housing collapse.
But Remmers now insists the company he runs with long-time partner Dennis Sackhoff has emerged from the bust with a strong enough brand and balance sheet to clear a path through the challenges of 2011.
Arbor will build as many as 350 new homes in 2011. That's just a third of what the Beaverton company built during the height of the real estate boom. But it marks a 33 percent increase from 2010, an indicator of Arbor's cautious optimism.
Arbor will launch six new communities in the coming year, most in Portland's western suburbs. Thanks to the ongoing strength of Intel, Nike and Columbia Sportswear, that territory has some of the stronger markets in the region, Remmers said.
Recognizing the significant price erosion in the housing market, the company's prices will go as low as $119,000, for condos at the Arbor Pass development in Hillsboro.
Arbor is grabbing opportunities presented by the downfall of some of its peers in the development world. Among its projects in the coming year will be a 34-lot subdivision in Lake Oswego and a 44-lot subdivision in Happy Valley. The underlying land is owned not by Arbor, as is typically the case, but by banks, which repossessed the land from prior owners.
"A lot of these banks will just liquidate land that they've foreclosed on, often at a 50 percent loss," Remmers said. "Or they can hire a builder to build them out. We'll build them for a fee."
It's a departure from Arbor's normal business model and not as profitable. But in lean times, it's a strategy that makes sense.
"It keeps us busy, keeps things rolling," Remmers said.
Keeping things rolling has not been easy for any homebuilder. As Arbor's annual revenue declined from $200 million a year in the boom times to a forecast of less than $100 million this year, Arbor was forced to slash its payroll from about 150 to 75.
Remmers told the crowd of some frightening days last spring and summer, after the expiration of the federal tax credit for qualifying homebuyers.
Arbor had been selling about 20 homes a month through the spring. Then came May and the end of the tax credit. "We sold four homes," Remmers said. "You want to talk about scary..."
June wasn't much better. But painstakingly, sales have returned to their former level.
Wednesday's gathering marked the 13th year Arbor has hosted its approximately 100 vendors to an annual meal. Remmers thanked the 200 people in attendance for standing by the company. "As tough as it's been, this is really a fun business," he said. "I look out there and see the faces. I see the survivors. I know we've all had to make some tough decisions to stay in business."
As the lunch adjourned, Remmers said Arbor will prosper in the coming years as the housing business slowly recovers. "It's going to be a long time, if ever, before we get back to the days like 2006-2007," he said. "I don't really want to go back to those chaotic days. It was unsustainable."
The downturn "has thinned out the industry to the real players," Remmers added. "It's a lot better for the business and for Arbor. Our marketshare will go up."
--Jeff Manning
