The builder credits the sales growth to changing market conditions.
In June, privately held Fischer Homes, the nation’s 30th largest home builder, experienced unprecedented sales growth of 138%, on top of already robust 2020 results. Sales for the year are now up 38% over the prior year—reflecting surging demand across all the markets it operates in, with 1,570 homes sold in the first six months. Fischer Homes is already closing in on its July sales goal, with half of the month still to go.
Fischer Homes credits the dynamic sales growth to changing market conditions. “We are seeing a shift of new construction taking a bigger piece of overall home sales,” said Tim McMahon, president and chief operating officer for Fischer Homes. “Customers want more room and different living spaces, supply is limited, and our home designs and communities are resonating with what today’s buyers are looking for.”
Fischer Homes carefully navigated through the current pandemic using virtual tours with sales counselors, private appointments with customers, and virtual walkthroughs on its website to engage with customers through recent months. “Our teams stepped up and embraced many of the tools we had been putting in place even before the pandemic, and this has resulted in an acceleration of our digitization efforts,” said McMahon. “All of our decorated model homes are online and available to tour virtually, so customers can click to walk through homes from their couch.”
Record low interest rates mean customers can afford even more home than they could just six to 12 months ago. Families now need additional space for home offices, remote learning, and home gyms, and new construction fits the bill better than existing resale options. New homes also have the advantage of never being lived in, and customers are looking for fresh alternatives and the latest design trends.
Fischer Homes also believes that more seniors will continue to stay in single-family homes given recent developments with the pandemic. On the other end of the spectrum, more millennials are turning the age where they will form households, and additional supply will be needed to meet this demographic trend.
Operating in its home market of Cincinnati, as well as Columbus and Dayton, Ohio, Indianapolis, Atlanta, and Louisville, Ky., Fischer Homes believes its Midwestern focus has also contributed to its sales pace in 2020. Affordability in the Midwest remains, and many of the markets Fischer Homes builds in are now among the hottest real estate markets in the nation.
“Cities like Columbus and Cincinnati don’t often come to mind when talking about U.S. housing market leaders,” said Steve Whaley, director of marketing for Fischer Homes. However, recent data shows that home listings in these markets are down 30% since 2019 when supply was already limited, suggesting that the areas Fischer Homes operates in are, in fact, leaders among U.S. markets. Housing supply increases will not happen overnight. Whaley continued, “Zillow’s economists recently pointed out Columbus is No. 1 and Cincinnati No. 3 among U.S. cities from the time a home goes on the market to when it goes pending—averaging between five and six days.”
The affordability of the Midwest may also have longer-term implications as companies allow more freedom to work remotely. Workers looking for bigger yards, lower taxes, and more house for the money may broaden their search in the years to come or head back to their roots in the Midwest.
A move to e-commerce in retail and a focus on the warehouses and logistics also indicates that the Midwest can continue to thrive. Amazon Prime has located its new air hub just a mile away from Fischer Homes headquarters in Erlanger, Ky.—a Cincinnati suburb. Amazon is investing $1.5 billion in the space and creating over 2,700 jobs. Wayfair operates a 900,000-square-foot facility on 52 acres also within minutes of Fischer Homes' headquarters. Already in growth mode, Wayfair is adding customers at a tremendous clip in the pandemic as more customers shop from home for furnishings. In Louisville, where Fischer Homes is also the market leader, UPS continues to invest in its distribution operations, committing to a $750 million expansion last October and 1,000 new jobs.
“Two-thirds of the U.S. population is within a one-day drive or 90-minute flight of many of the markets we build in,” said Whaley. “This positions our new-home communities for the future. E-commerce has tremendous room to grow from here, and it is shifting at an even faster pace than what anyone expected going into 2020.”
Celebrating its 40th year in business, Fischer Homes executives have seen many housing market twists and turns, but this may be among the most unique. “We see the tailwinds of historically low interest rates, limited supply, the desire for more usable space, and a push to suburban living as being ongoing themes, and these are proving to more resilient than any uncertainties in the market,” said McMahon.