Few homebuyers knew what Taylor Morrison was when it entered the homebuilding industry in 2007.
It’s now the eighth-largest homebuilder in the country, having sold nearly 13,000 homes last year and generating just under $8 billion in revenue. The company has become a widely recognized name among consumers, bolstered by its recent partnership with the ABC reality show “Extreme Makeover: Home Edition.”
Amid a challenging housing market, the homebuilding giant has focused in recent years on a segment where buyers are plentiful, decisive, and aligned with Taylor Morrison’s value proposition: active-adult, resort-style living.
Starting a fresh company during the Great Recession
The Scottsdale, Arizona-based builder formed decades ago as a combination of two companies: a major builder based in the United Kingdom, Taylor Woodrow, and U.S.-based Morrison Homes.
“I think knowing that the merge of those two organizations that started Taylor Morrison happened at the pinnacle of the worst time in housing is a big part of our story because Taylor Morrison was really an unknown animal,” said Chief Marketing Officer Stephanie McCarty, who joined the builder in 2015, in an interview with Homes.com.
Shortly after the merger, the company elevated Morrison Homes Area President Sheryl Palmer — who had held the role for about a year following positions at several other builders — to CEO. Palmer became, and remains, the only woman leading a publicly traded homebuilding firm.
“Those early days are really kind of finding our footing. How do we compete? At the time, we were much, much smaller. And who do we want to be?” said McCarty.
The answer to that question led Taylor Morrison to focus on homes as an experience, rather than seeing them as a commodity. More specifically, building homes primarily for move-up homebuyers, including 55-plus buyers.
Move-up buyers are defined as individuals who have equity from a first-home purchase and are looking to upgrade, allowing their budgets to stretch further and their choices to be more discerning. Taylor Morrison’s average home sale price last quarter was $602,000, according to its earnings report, while the median home price in October was $385,000, shows Homes.com data.
Older adults today live young and demand the lifestyle
Taylor Morrison builds homes under its Esplanade and Yardly brands, too, catering to other consumer segments. Yardly develops built-for-rent housing while Esplanade constructs resort-style living. Both are highly amenitized, said McCarty, tying back to the company’s overall mission to promote experiences. The strategy is working too: Taylor Morrison's profit has been stronger than many of its competitors.
Esplanade property amenities include pickleball and bocce ball courts, fitness centers, pools, event centers, and spas, all providing experiences that cater to the demands of older adults.
“The home is kind of the afterthought. It's really, ‘What do I want my life to look like? What do I want my days to look like?’ And the home is just someplace you're going to sleep and eat, but you're going to be out in the community with your friends,” said McCarty about older adult homebuyers.
The Esplanade brand launched 13 years ago in Florida and then, within the past five years, expanded into North Carolina and California. It's now moving into the Las Vegas market with an upcoming development of 400 homes. McCarty said the resort lifestyle brand is a “large strategy” for the builder, with its eyes set on land for further growth.
Being 55 years old “30 years ago was “The Golden Girls.” … And today, 55 looks like Jennifer Lopez and Jennifer Aniston,” said McCarty. “We found that this demographic, they're not choosing the place that they’re going to die. They're choosing a home where they can live and they can extend their life and enjoy their life.”
The largest older adult development in the country and the best-selling for years, The Villages in central Florida, is a testament to this idea. The massive complex sells a laid-back lifestyle and experiences to nearly 150,000 residents drawn in by its amenities, programming and like-minded neighbors.
Age restrictions for active adult developments are common overall, allowing only residents aged 55 and up, but McCarty notes that’s even changing. At Taylor Morrison, many Esplanade properties are not age-restricted because residents still have children living at home, or households turn into multigenerational living arrangements.
Other homebuilders have their own longstanding active adult brands, and they have made moves to accommodate the same buyers with changing tastes. The country’s third-largest builder, Pulte Homes, operates its Del Webb brand that’s limited to buyers 55 and up, but this year, it announced an offshoot, Del Webb Explore, that builds the same communities without the age restriction.
Still, a common conversation when it comes to new construction during the past year has been affordability, and McCarty noted these resort-seeking homebuyers still inquire about incentives and offers for price cuts.
Homebuyers today remain hesitant
In McCarty’s tenure with Taylor Morrison, the firm launched online self-serve tools to address changing buyer habits and demands. It’s given the builder a peek into buyer behavior.
For example, if a buyer plays around building a home on Taylor Morrison’s website, there’s a 60% conversion rate, and they’ll likely purchase a higher-priced home, said McCarty, because they can easily see how much each upgrade costs.
While median home prices continue to tick up, Taylor Morrison still sees “great traffic” online, though many visitors don't ever convert to a buyer or reach out to learn more.
In the builder's recent earnings call, it reported a double-digit increase in new home contract cancellations, totaling 15.4%. Still, McCarty’s seen buyers return from a year ago, picking up the conversation when they feel more confident.
“People are interested, I think it’s, one, a qualification issue depending on the price and the rate. And two … people are just a little unsettled. The world feels a little scary, so making a big life decision with that backdrop,” said McCarty. “It's hard to create urgency when people are feeling hesitant because of the macro environment, even if their financial situation personally is OK.”