Omaha Home Builder John Barrett Adjusts To A Slower Omaha Housing Market

For a while, Omaha home buyers couldn’t get enough of Omaha home builders’ offerings in the $250,000 to $500,000 range. Then came the slowdown…

…but before the slowdown started, John Barrett of Barr Homes felt that he had identified an underserved niche in a price range lower than his $250,000 Barr Homes. With HearthStone Homes and Celebrity Homes seemingly dominating the under-$200,000 Omaha housing market price point, John Barrett felt that solidly-built custom homes priced between $190,000 and $230,000 would be in demand.

When John Barrett formulated the plans for this company, he knew that labor and material costs were too high at that point to keep the homes in the right price range - so ProLine Homes was shelved for a while. However, when the slowdown became apparent in 2006, labor and material costs dropped enough to make ProLine Homes a financial possibility.

During 2006, John Barrett built five ProLine homes. In 2007, he built 33.

The more expensive Barr Homes weren’t doing as well, with only 48 sold in 2006 and 26 sold in 2007. According to John Barrett:

We went from doing 20 to 24 houses in a six-month period down to eight in a six-month period. Maybe God saved me, but our ProLine kicked in to fill in the gap.

While ProLine sales are promising so far in 2008, John Barrett still is being conservative for 2008. He originally planned to build and sell a total of 80 to 90 ProLine and Barr Homes, but recently cut that number to 60. He has not yet reduced his work force but might if he doesn’t sell enough homes by July to meet his overhead.

Adding to Omaha home builders’ difficulties is the fact that a few banks have tightened the definition of “pre-sold.” During the Omaha housing boom, one or two of the banks John Barrett worked with would grant a loan to start construction if the home sale was conditioned upon the buyer selling his or her existing home. Today, according to John Barrett, those banks are accepting only “clean contracts,” or contracts with no contingencies.

Tags: Barr Homes, proline homes