Case Studies

AV Homes Inc.

Building diverse communities in Arizona, Florida and North Carolina

AV Homes Inc. (AVH) has roots dating as far back as 1933, although the company has existed in its current form since the late 1960s. The business has evolved significantly through the years, building a niche in planned community building for nearly 50 years. In early 2012, the business went through a major rebranding effort to more clearly define itself as a homebuilder. The company overhauled its management team and set up a new headquarters in Scottsdale, Ariz., to oversee a team of more than 125 employees throughout the southern United States.

Roger Cregg, president and CEO of AVH, is proudly leading the company today. “I joined the company in December 2012, so I’ve been here just over a year,” he explains. His experience as CFO for major companies such as Pulte Homes and Service Master made him the perfect candidate to turn around a struggling development business. AVH struggled through the downturn with excess land and a miserable market. In his short time with the business, Cregg has helped the team change direction.

A strategy of diversification

With the housing market down during the recession, AVH attempted to streamline the operations to develop and sell only to the active adult segment, the 55-year and older buyers, while also supporting the funding by selling off some owned properties.

“The issue we had,” Cregg explains, “Is that the active adult segment was slower to recover than the primary residential segment. The active adult demographic represents a discretionary buyer. They don’t have to move unless they really want to. The active adult communities sell a lifestyle, not only homes. Through the recession, that demographic stayed home and weathered the storm.”

To counter this, AVH has moved back into the primary residential segment, serving the first-time, first-move-up and move-up buyer segments. The active adult market hasn’t grown and neither has the market for first-time buyers. Instead, Cregg says his team is catering to move-up buyers, often growing families moving to make way for more kids or to get closer to better schools.

“Our business was suffering,” Cregg notes. “Our active adult communities were not profitable. When you have a community with 1,700 lots, you have to pay for land, infrastructure and amenities with very small returns. When those properties don’t move after you have developed them, you cannot make the money back fast enough.”

Since the company changed strategies, AVH is not completely out of the active adult market. Cregg says instead, his team is balancing it out with family residential communities, a move that has started to put the company back in the green. “We are building houses and selling them quickly to get back to profitability,” he elaborates. “This will allow us to retarget the business to segments we want for the long term.”

Staying on track

The locations of the company’s communities are no coincidence. AVH owns nearly 10,000 lots in Florida and more than 2,000 lots in Arizona. Both of these states have seen a huge boom in migratory population growth over the last decade. This growth is projected to continue in the coming years.

Both Arizona and Florida are slated to attract the next generation of retirees. Aside from a warm climate, these states boast affordability, unmatched by other southern states. While Cregg notes that the business has in part shifted toward traditional family homes, active adult communities remain a significant component of AVH’s market. The team is seeking to corner this market early on, establishing attractive and affordable communities to retire in.

AVH is playing a continuously larger role in construction, as well. While quantity is important to ensure returns, Cregg and his team strive to provide a quality home for future residents.

“We do quite a bit in-house, but we sub out all of the major trades,” he explains. “Our goal is to provide value and we value-engineer all of our construction. We actually bring in our trades to help us design communities because they know how to provide the best product and work for the job at the best rate.”

Cregg, his team and the company’s strategic partners take great pride in providing services that build more than houses. AVH has adopted a dedication to creating havens for families and retirees that are comfortable, functional and attractive. While the numbers on his balance sheet are of high value, Cregg knows that a quality product is what brings customers to AVH.

Over the last few years, AVH has gone from a business liquidating many of its land assets to a strong and growing developer. The team has returned to the important business of building communities around location, features, accessibility, amenities and activities in always providing future homeowners with an innovative, exceptional and enriched living experience. As the business grows, AV Homes Inc. is reaching into a growing market, providing value alongside integrity.

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Spring 2018



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