AZ Daily Star – BUSINESS – Real Estate – Christie Smythe 1.22.2008

In many places across the country, it’s a rough time to be a home builder.

New-home sales are dropping nationwide, prices are being slashed, and the value of one of builders’ prime assets, land for subdivisions, may be slipping as demand cools.

Taking a turn away from all the doom and gloom, one local builder is trying a new business tactic.

Pepper Viner Homes Inc., based in Tucson, wants to take its building services out of subdivisions and go straight to individual property owners.

For a price somewhat above that of a home built in a subdivision, and somewhat below that of a true custom home, Pepper Viner will send a crew to a person’s own lot to build a Pepper Viner home, said Michael Whyde, executive vice president of Pepper Viner and a partner in the company.

Whyde said the idea sprung mainly from customer requests.

“People like our floor plans, but (some) don’t want to live in a more traditional community,” said Whyde, referring to the production-home subdivisions where his company usually builds.

As part of the new strategy, the builder has also retooled some of its floor plans to fit smaller lots in the city’s core, rather than just larger lots on the metro area’s outskirts.

While most of its homes in new subdivisions range from 2000 to 5000 square feet, Pepper Viner’s plans for more urban lots include square footage from 2000 to about 2800, Whyde said.

Meanwhile, the company is continuing its mainline business of selling homes in subdivisions.

Whyde said the new track was not intended as a response to a difficult market.

“I don’t think this has changed our business strategy,” Whyde said. “We’re just expanding our opportunities.”

But undeniably, home builders in Tucson are coping with a dramatic shift.

In 2007, residential building permits in the Tucson area dropped to 5098, slightly below the level in 1996, and a decline of 41 percent from 2006, according to December’s Southern Arizona Housing Market Letter from Bright Future Business Consultants.

Local new-home-market consultant Lucinda Smedley said Pepper Viner’s new tactic has been tried by other builders in the past, and it may help the builder cope with the market.

“I think it helps them to diversify their business and protect themselves a little bit more against the downturn,” she said.