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Close-Up: Mike Levesque

Lennar Homes shapes constructive outlook for San Diego homebuilding market

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While many of today's economic headlines decry a tepid homebuilding industry, Mike Levesque has an alternative message: Things are looking up.

Levesque, regional vice president of Lennar Homes (NYSE: LEN) of California, focused on the many positive signs emanating from San Diego's residential real estate market as the company continues to assert itself in a homebuilding market that has struggled in past months. Pointing to job growth, favorable interest rates and increased activity from homebuyers, Levesque emphasized that San Diego's industry has in it the basis for promising future months and years, despite the homebuilding economy's recent grumblings.

"There are a couple of things that bode very well for San Diego overall," said Levesque, whose company holds the distinction of being San Diego's top builder (based on fourth-quarter net sales), according to the Building Industry Association (BIA) of San Diego. "We have a very healthy, diverse and unique regional economy that is buoyed by a couple of unique characteristics to it: our relationship to the ocean and our relationship to Mexico." The considerable commerce that passes through San Diego from both the sea and from south of the border reinforces the economy's vitality and capacity for job growth, he reasoned, which bodes well for the homebuilding industry.

"The other thing going for us is that this is a great place to live," he continued, "and my experience has shown me that when you are operating in a place that people absolutely want to move to, that sort of thing bodes well for an industry."

Added to his optimism are "tightening inventories" in the single-family market and what Levesque terms a "return to true fundamentals" in the industry. Right now, Lennar has roughly three months' worth of inventory in the market, he said, which many consider a return to conventional levels. The past accumulation of inventories that resulted from investors' faith in future appreciation has given way to a more demand-based growth in the market.

"I think that we are seeing a return to a normal homebuilding condition where the investors will play a smaller role in the industry, and demand in our product will be tied to job growth," Levesque said. "We see things improving in the coming year."

Donna Morafcik, vice president of communications for the nonprofit BIA for which Levesque once served as president, reaffirmed Levesque's outlook by underlining the need for perspective in evaluating the industry.

"(The homebuilding market) is cyclical, as is any aspect of the economy," she said. She pointed to San Diego's more than 2,500 new home sales during the fourth quarter of 2006 -- a 27 percent increase from 2005 -- as just one example of how San Diego's is a "dynamic" homebuilding market.

Lennar Homes, one of the BIA's 1,450 member companies, boasts several significant upcoming projects throughout the county. In Santee, it is developing a master-planned community called Sky Ranch that will feature 370 home sites ranging from 6,000 square feet to 20,000 square feet. Levesque calls it "the largest community of its type in East County," and it will feature four different product lines on Santee's ridgeline. Furthermore, Lennar will offer higher-end buyers a new housing opportunity in The Lakes, a community of 357 upscale homes poised atop 500 acres adjacent to Rancho Santa Fe. Through these and other diverse projects, Levesque said, Lennar continues to operate from a "diverse offering platform" appealing to both urban and suburban residential markets.

One aspect that most distinguishes Lennar Homes, Levesque said, is its "Everything's Included" program, a simplified home-buying process through which buyers can customize their homes upfront before purchasing. Whether adding rooms, tiles, granite or new colors to their homes, customers can upgrade without the significant expense incurred from a gradual customization program. Instead, Lennar conducts what Levesque calls a "science-based" process utilizing focus groups to decide which aspects are most important to individual buyers before they purchase the home. The results of the unique comprehensive package have been favorable, and customers' feedback has been positive throughout the five-year old initiative, Levesque maintained.

The son of a builder, Levesque said his early exposure to the homebuilding industry prompted his involvement in residential real estate. He served for years as president of Greystone Homes, which was acquired through Lennar Corp. about eight years ago and has been running San Diego operations for Lennar for more than seven years. Throughout his endeavors in residential development, Levesque said involvement in homebuilding has been fulfilling because of the impact it has on families and their communities.

"I just really liked the idea of building homes for families; I think it is something that is near and dear to my heart," Levesque said. "It's nice to be doing something where, if it's done well, you're putting a good stamp on this world."

McRoskey is a San Diego-based freelance writer.

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