Landsea Homes moves HQ from Newport Beach to Texas

Landsea Homes is pulling up its corporate office in tony Newport Beach and plopping it down in Dallas.

The small builder that blossomed in California is moving its hub to the northern Lone Star State as part of a national growth plan, the Orange County Register reported. A timeline for the move was not disclosed.

The homebuilder’s headquarters will take up 7,700 square feet on the 10th floor at 1717 McKinney Avenue in Dallas’ Uptown district.

Texas’ highly educated workforce and lower cost of living were among reasons Landsea CEO John Ho gave for the move, according to the Dallas Morning News. It’s in the best interest of the company’s shareholders, he said.

The relocation comes as builders such as Landsea suffer a sales crash that curtailed house hunting last year and scared would-be buyers out of sales contracts. At the end of last year, Landsea said its cancellation rate for Arizona home sales hit 72 percent.

The firm cut 8 percent of its workforce nationwide, but declined to disclose the number of laid-off workers. At the end of 2021, it reported 384 employees.

Moving the corporate headquarters from Newport Beach to Dallas won’t cost any Orange County jobs, the company said. The move will affect mostly senior executives, including CEO John Ho.

Landsea, a U.S. spinoff from a Chinese homebuilder, was founded in 2013, then went public in 2021.

Among its first big projects was the 500-home IronRidge community in Lake Forest that finally sold out last year.

Landsea has since added operations in Arizona and Florida — they roughly accounted for 70 percent of 2022 sales — and is now starting a Texas push.

The relocation is “driven primarily to give us better efficiency and effectiveness in managing our bi-coastal business by being based in the center of the country in a central time zone,” Landsea president Mike Forsum said in a statement.

Last year’s rising mortgage rates and a decided change of attitude among house hunters crashed the buying pace and forced price cuts across the industry. So penny-pinching is the current trend in homebuilding.

A Newport Beach corporate address isn’t cheap, according to the Register, nor is it a great look for a builder specializing in lower-priced houses.

Landsea Homes’ bottom line fell to $26 million in earnings last quarter from $38 million during the same period in 2021. Sales have slowed too.

The company expects to complete between 400 and 445 homes this quarter, compared to 703 in last year’s fourth quarter, it told Wall Street. At the same time, estimated average prices of those closings fell to between $520,000 to $525,000 from $594,000 in late 2022.

Meanwhile, new orders fell to 88 in the past three months from 1,432 in 2022’s first three quarters.

Landsea’s projected gross margin in the first quarter will run between 21 percent to 22 percent, according to the Register. That’s a profitability drop from 26.9 percent for all of 2022 and just below 22.6 percent for 2021.

Much of Landsea’s declines, like those of other developers, comes from heavily discounted mortgage rates offered as incentives for buyers.

— Dana Bartholomew