Home builder Toll Brothers’ average house sells for $848,000, a sum that’s well out of reach of most buyers. To broaden Toll Brothers’ market, Chief Executive Douglas Yearley is taking inspiration from another luxury brand.
Yearley says Toll Brothers is beginning to build homes for less than $500,000, a move he compares to BMW selling 3-series sedans that are affordable for upwardly mobile consumers who aren’t ready for a 740.
At Toll Brothers’ Jupiter County Club, for instance, most models are priced at $600,000 and up, but a 2,200-square-foot model starts at $420,995.
The shift is partly aimed at wooing millennials into the housing market, Yearley says.
“Homeownership is not on their radar screen at all,” he said Wednesday during a presentation to the National Association of Real Estate Editors in Denver.
Yearley pointed to the still-slow pace of homebuilding. He said U.S. builders’ slower pace of construction since the Great Recession has created a shortfall of 6.6 million new homes.
“We are still way behind normalized supply of houses.” Yearley said.