By Paul M. Thompson, CAE
(Paul M. Thompson, CAE, is Senior Vice President of the Florida Home Builders Association.)
You know things are bad when builders who usually talk about how many homes they sold in recent weeks are breaking out the champagne bottles over even the slightest increase in traffic at their models. I like to be optimistic but even the most bullish economists, like our own David Seiders from the National Association of Home Builders, is admitting that the housing downturn has not yet bottomed out. The cruel truth is that those markets like ours that rode high for the past 15 years have been brought to the lowest by speculation, over-building, and huge inventories of unsold new and existing homes.
Folks, it is what it is, so let’s make the best of it. Even in these difficult times, here are 10 things we can be thankful for:
1. The downturn has taken the pressure off material and labor shortages. Perhaps we needed breathers in both these areas. With respect to labor, it may be a great time to pick up a superstar executive or superintendent who has been laid off by another building company.
2. Because of the slowdown in building, local governments may now better appreciate the vital role that housing plays in generating tax revenues. Just maybe, this realization will translate into less restrictions on development and construction.
3. The housing recession has not dampened commercial building or remodeling. The surprising overall strength of the economy has kept commercial strong along with apartment building spawned by the fact that so many people who cannot afford to buy instead opt to rent. As for remodeling, so many factors are working in its favor, including the fact that people are staying in their homes to keep somewhat of a lid on their property taxes.
4. Mortgage interest rates remain historically low. There’s no question the subprime debacle hurt, especially because those risky loans fueled a lot of first-time home buyers, but the rate environment is positive and lenders will continue to work hard to earn your business and qualify your buyers.
5. Without the frenetic pace of building, there’s time now to re-evaluate your business plan and your product. Consider incorporating more energy-efficient, fortified, and green building features into your homes. These efforts could give you an edge in what will certainly be a highly competitive market in the near term.
6. Your local Home Builders Association’s Parade of Homes becomes more valuable than ever. Parade participation is up this year because of the higher inventories of new homes... and Parades continue to represent a powerful marketing opportunity.
7. The downturn may level the playing field between public and small builders. The public companies have increased their dominance in recent years but their natural obsession with their stock prices and quarterly earnings has led to major personnel layoffs. The more-nimble smaller builders can cut overhead quicker and less painfully, allowing them to live to fight another day.
8. There are lots of people who want to see you succeed and you need to use them. Suppliers, lenders, architects/designers, interior merchandisers, and sales and marketing professionals will help you through the tough times if you’ll seek out and listen to their expert advice. As builders, you’re not in this alone.
9. It’s probably a good time to take care of friends and family. I mean this both on a business level (perhaps building or selling a home to a friend or relative) and a personal level (spending more quality time at home).
10. Finally, we can all be thankful that home building is one of the few industries in America that is not subject to foreign competition. It should not be lost on any of us that Toyota recently passed Ford and GM as the No. 1 seller of automobiles in the United States. In America, home-grown companies meet the housing needs of our people.
My heart goes out to those who have suffered serious pain in this downturn...
from the personal and family stress to the very real tragedy of losing your job or your business. In those instances, it’s naive to suggest that some 10-item list will lift your spirits. But we’ve had 15 years of good times and no matter how bad it gets, ours is a fundamentally strong and vital industry. The sun will eventually break through the clouds.