Grow Your Business, Not Your Inbox
Co-Founder of Levitt & Sons
"Any damn fool can build homes. What counts is how many you can sell for how little."-William Levitt
Like many brilliant entrepreneurs, William Levitt didn't come up with the idea that made him rich. He stole it. Although it is true that Levitt perfected the assembly-line approach that enabled his workers to churn out houses at an incredible rate, long-forgotten developers in California had been doing something similar for years. Levitt's true genius was that he foresaw the unprecedented demand for middle-class housing that followed World War II, and by applying a panoply of assembly-line techniques to housing construction, positioned himself to make the most of the situation. His unique vision of a planned community with well-built but affordable houses jump-started the suburbanization of America and dramatically changed the way homebuilders built and homebuyers bought.
Ironically, the man who would become known as the "Pioneer of Suburbs" never intended to be a builder. His dream was to be a commercial aviator. But he drifted into the housing business after his father, Abraham, and brother, Alfred, designed and built a house on a lot William owned but had been unable to sell. With a house on the lot, William quickly made the sale. Realizing a good thing when he saw it, he immediately joined forces with his father and brother to form Levitt & Sons in 1929.
With Abraham handling the landscaping and community planning, Alfred designing the homes and William dealing with management, financial matters and sales, the company experienced moderate success throughout the 1930s. By the end of the decade, Levitt & Sons had built 2,500 homes ranging in price from $9,100 to $18,500.
When World War II erupted, William put his business career on hold to serve in the Pacific with one of the Navy's Seabee combat construction units, where he earned a reputation for bending rules and even disobeying orders if it would help him accomplish his objectives.
Shortly after William returned to the family business in 1945, the company entered its greatest era of success. Millions of newly liberated GIs, many with wives and children, were eager to buy homes. Unfortunately, wartime shortages had crippled the housing industry, and there simply weren't enough homes to meet the demand. Sensing a tremendous opportunity, the Levitts purchased 1,000 acres of land on Long Island, 25 miles east of Manhattan, and embarked on a bold venture to build 17,000 homes. It was quite an optimistic goal at a time when most developers averaged four to five houses a year. But the Levitts had a plan.
They broke down the construction process into 27 separate tasks and assigned each task to a group of workers who would go from house to house repeating their specific task at each building site. Trucks would deliver parts and materials to homesites placed at 60-foot intervals. Then the carpenters, tilers, painters and roofers arrived each in turn. There was even one employee who did nothing but bolt washing machines to the floors. When the process was in high gear, houses were completed at the rate of as many as 36 per day. (Even at that pace, Levitt was hard-pressed to keep up with demand. During the first weekend of building, Levitt sold more than 300 houses.)
To keep down lumber costs, the Levitts bought their own forests and built a sawmill in Oregon. They purchased appliances directly from the manufacturer, cutting out the distributor's markup. They even made their own nails. The Levitts' methods kept costs so low that in the first few years, their cookie-cutter two-bedroom houses-which featured fireplaces, radiant-heated floors, up-to-date kitchen equipment, laundry rooms and televisions-could be sold for just $7,900.a price that still allowed the Levitts a profit of about $1,000.
In its first year, William's dream community, which he rather arrogantly dubbed "Levittown," made the company a profit of approximately $5 million. In 1949 alone, the Levitts built 4,600 houses and sold them for a total of more than $42 million. Clearly their mass-production technique was the key to the company's future. It also dramatically changed the housing industry. After seeing the Levitts' success, builders across the country began turning cornfields into bedroom communities, mimicking the Levitts' cost- and time-cutting methods. The suburbanization of American was on.
From the late 1940s to the late 1960s, the Levitts experienced phenomenal success, building additional Levittowns in Pennsylvania, New Jersey, New York and Florida. William assumed more control when Alfred left the company in the mid-1950s, and then complete control when Abraham died in 1962. By the late 1960s, William had become one of the richest men in America, with a fortune estimated in excess of $100 million. He lived in a lavish 30-room mansion on his "La Coline" estate in Mill Neck, New York, and spent much of his time on his 237-foot yacht, La Belle Simone, named after his third wife. But after nearly four decades of unprecedented success, Levitt's luck was about to change.
In 1968, after his company had built more than 140,000 homes around the world, Levitt sold Levitt & Sons to International Telephone and Telegraph (ITT) for $92 million in stock, most of which went directly into his pocket. The deal barred him from the domestic construction business for 10 years, so using his ITT stock as collateral, Levitt embarked on a series of overseas building projects in Iran, Venezuela, France and Nigeria. But the success he'd achieved in the United States eluded him. Even worse, in just four years, the value of his ITT stock dropped 90 percent, leaving him millions of dollars in debt.
In the late 1970s, Levitt made several abortive attempts at a comeback, including two developments in Florida, both of which failed, forcing him to refund thousands of prospective homebuyers' deposits because the homes were never built. The final blow came in 1981, when New York State Attorney General Robert Abrams charged that Levitt had illegally siphoned money from the Levitt Foundation, a charitable organization started by his family years earlier. Levitt was eventually forced to repay $5 million to the foundation.
By 1982, with much of his fortune gone, Levitt had settled into a restless retirement. He died at North Shore University in Manhasset, New York, January 8, 1994. Despite his financial problems in his later years, William Levitt, along with his father and brother, revolutionized the housing industry. The mass-market construction methods they helped to make industry standards enabled millions of middle- and working-class Americans to own their own homes, and reshaped the face of the nation.
Afordable But Not Equal
William Levitt's dream of affordable, well-built housing was not for everyone.at least not initially. As late as the 1950s, he refused to sell homes to African-Americans. He once offered to build a separate development for blacks, but he would not integrate white developments, believing that integration would cause him to lose 90 to 95 percent of his white customers. Levitt defended his policy by saying, "We can solve a housing problem or we can try to solve a racial problem. But we can't do both." Levitt would eventually relent, of course, but decades later, many of the communities he created remain predominantly white.
A Family Affair
Although it is William Levitt who is generally credited with the success of Levittown and the innovations that made it possible, he could not have accomplished either without his brother and father. In fact, Alfred and Abraham Levitt first experimented with many of the standardization and cost-reduction techniques that were later used at Levittown while building 1,600 homes for military and civilian personnel stationed at the Norfolk Naval Base in Virginia in 1942.