A real estate meltdown might seem like a bad time to start a home-building operation.
The four men who founded the New Home Co. in August 2009 had a different view even though the industry was still reeling from bad loans, shrinking bank credit, low housing prices and too many homes on the market.
"We were starting from scratch," said H. Lawrence Webb, chief executive of the Aliso Viejo firm. "It was our own money. We got to handpick the best and brightest in the industry, and that's what we did."
Company strategy was to "build in infill sites near jobs, where people wanted to live," Webb said. By infill, Webb means those rare pockets of open space in densely built-out urban land.
Webb said the company doesn't have a set number of home blueprints. "Each site is unique," he said.
Founders Wayne Stelmar, Joseph Davis and Tom Redwitz are still with the company. Davis is chief investment officer. Redwitz is the chief operating officer and Southern California president. Stelmar is chief financial officer.
The New Home Co. has built up its portfolio of homes in three geographic areas: coastal Southern California, the San Francisco Bay Area and Sacramento.
When the company was starting, so-called fee building was the focus. The New Home Co. built, marketed and sold homes for landowners, mostly in Southern California. Fee building remains a big part of the business.
The company also does joint ventures with landowners in master-planned communities, typically under the New Home Co. name.
In 2013, joint ventures had become 68% of total sales.
According to a recent investor presentation, the bulk of the company's lots — 3,743 — are in Southern California, running along the coast from Ventura County to San Diego County.
The Sacramento area is next largest with 1,889 lots, followed by the Bay Area, with 892 lots.
Webb said the company typically builds detached, primary residences ranging from $300,000 in Sacramento to about $4 million in Newport Beach.
On Dec. 5, the company formally unveiled its Meridian project, featuring 79 homes in Newport Beach, ranging from 2,335 to 3,905 square feet. The homes cost more than $1 million.
In November, the company released third-quarter earnings that showed revenue growing to $28.6 million from $21.2 million a year earlier. But an increase in costs pushed the company to a loss for the quarter of $1.3 million, compared with a profit of $2.1 million a year earlier.
In January, the company raised $86 million through an initial stock offering, with plans to buy land and build homes.
Consumer research company Elliant named the New Home Co. tops in its "best customer experience" category in 2013 and 2014.
The Bay Area Building Industry Assn. gave the company Community of the Year awards in 2012, 2013 and 2014.
The New Home Co. must contend with the inevitability of ups and downs in the housing market. "Cyclical is part of our business," Webb said.
Another obstacle has been finding suitable land in densely built-out areas, he said.
"Our biggest challenge is growing the company while maintaining the core values that we have," Webb said. "If you're not careful, you can lose sight of that."
Of the five analysts who regularly cover the New Home Co., one considers it a strong buy. Two others rate it as a buy. Two suggest holding the stock.
Alex Barron, senior research analyst for the Housing Resource Center in El Paso, has a neutral rating on the stock but is generally upbeat about the company.
"They are less exposed to swings in the market than competitors who have more properties in inland communities," Barron said. "They have a pretty bright outlook, and I'm expecting significant growth over the next few years."