A real confidence builder
Eastbrook Homes’ return to prominence is indicative of a surging economy.
The Great Recession shook consumer confidence, and maybe no industry suffered more from that confidence crash than home builders.
A look at Eastbrook Homes over the last 10 years is indicative of the industry’s crisis times.
According to Business Journal surveys, Eastbrook built 250 units and brought in $64 million in revenue in 2005. In 2004, Eastbrook took in $74 million in revenue.
Once the recession began to strengthen, however, the demand for new homes dried up and Eastbrook began its downward spiral. The company had revenues of $34 million in 2007 and a low of $28 million in 2008, according to Business Journal surveys.
When the economy started on its downward slope, the effects were felt in the housing industry immediately, said Bob Sorenson, vice president of sales and marketing at Eastbrook.
“What we went through is unlike anything since the Great Depression,” Sorenson said. “That happens when people lose confidence — they don’t buy stuff.”
While the fall in revenue was quick, the climb back up has been slow and steady for Eastbrook — and for the rest of the home-building industry.
In 2009, Eastbrook responded to the Business Journal’s annual survey of residential home builders with $29 million in revenues, then $35 million in 2010. A small dip in 2011 was recorded with $32.5 million in revenues before the climb began again in 2012.
“We’ve been seeing improvements pretty steady here for several years,” Sorenson said. “It’s been a gradual improvement on a year-to-year mark, and it’s a long time coming.”
In 2012, Eastbrook reported $48 million in revenues.
Sorenson points to 2013 and 2014 as the years when it really began to feel like the company was back on solid footing.
Eastbrook reported 2013 revenues of $63 million and then reported another large jump in 2014 with revenues reaching $95 million.
To achieve that number, Eastbrook built 335 houses in 2014, with an average square footage of 2,508. The builds are all across the West Michigan region, many in Forest Hills, Rockford and Hudsonville and along the lakeshore, Sorenson said.
Sorenson said the average cost of the new builds is more than $300,000. He said during the economic downturn, the company began increasing efficiencies by building fewer — and smaller — houses.
With interest rates staying low, consumers now feel they have more freedom in what they can do.
“There’s not a lot of rocket science behind it,” Sorenson said. “It provides a lot of buying power, and it’s good for everyone.”
Eastbrook’s revenue increase comes from more and bigger homes being built, with better amenities, Sorenson said. But what it really starts with is consumer confidence. Sorenson said he doesn’t see another recession like the Great Recession for several decades and is confident of Eastbrook’s outlook for years to come.
He said West Michigan lacks sufficient housing supply for the great economic position the region is in.
“The value we provide is so much greater than many other regions across the country,” he said. “West Michigan offers a great quality of life, from a great city in Grand Rapids to the amazing lakeshore of Lake Michigan. It’s just a really attractive area.”