The news last week that PulteGroup (PHM), the country’s largest homebuilder, would move its suburban Detroit headquarters to Atlanta could hardly come as a surprise to Michigan’s business community, which can add this sorry chapter to the endless chronicle of the region’s decline. Only 8 percent of Pulte’s investments come from the Midwest these days, while 37 percent of closings last year were on properties in the Southeast. The company will take with it some much-needed tax revenue and the trickle-down effects of about 325 relatively plump salaries, although the builder is far smaller after laying off 80 percent of its total workforce amid the housing downturn.
Pulte Chief Executive Richard Dugas says Atlanta is a better fit with the long-term growth trends in housing: “This relocation will bring us closer to our customers and a larger portion of our investment portfolio.” There was also a little bit of a sweetener from the homebuilder’s new hometown: Pulte will receive at least $3 million in state and local incentives, according to the Atlanta Business Chronicle, which probably doesn’t hold too much sway for a company that posted $4.8 billion in revenue last year.
A value investor in the housing market, however, might prefer to stay in Motor City. Detroit home prices jumped 18.5 percent in the past year, according to the latest Case-Schiller Index, a much faster rise than the national average of 10.2 percent and almost as much as Atlanta’s 19.1 percent. Prices are being driven, in part, by scare supply—a dynamic home builders ought to be paying close attention to since the crisis. In the first quarter, 35 percent of home sales in Georgia were foreclosure-related, the highest share in the country; Michigan ranked No. 4 in foreclosure-related sales, at about 25 percent of the total.
In the end, though, the site of a corporate headquarters has little to do with customers, or even supply-demand economics, and more to do with access to financiers and suppliers. If it were all about the end user, Pulte would be shipping its executives to Texas, where it closed on more homes last year than it did in the Southeast or any other region of the country.