Strategic Residential Marketing

The quotation above is attributed to John Heywood, a fifteenth century English writer. It closely resembles several Old and New Testament verses, most notably Jeremiah 5:21 (“Hear now this, O foolish people, and without understanding; which have eyes, and see not; which have ears, and hear not”) and Matthew 13:13 (“Therefore I speak to them in parables: because they seeing see not; and hearing they hear not, neither do they understand”). So this concept has been around for quite some time.

Yet it appears that the message is not being received and I am now well past the point of frustration in advising homebuilders and developers to simply look at the market to determine what will sell and hearing their automatic response of “you do not understand that things are different here and we cannot do that”. The fact is, things are not different here, there or anywhere else as the market is the sole determinant of where our buyers will live, what size and type of home they want and what they will pay. It does not matter what was the cost of the land or improvements, what the architect believed to be an attractive or appropriate design, or even who the builder is or how they do business. While the specifics of the consumers’ decisions will vary somewhat depending on geographic location, the national and local economy, the job market, interest rates and consumer sentiment, the homebuying market will always make their desires quite clear and all we need to do to succeed is look, listen and comply.

When homebuilders and developers fail to see, the only available course of action to sell the homesites or homes is to lower the price (or otherwise enhance the offering) until they have created such a visibly superior value that it overcomes all other concerns. But that typically results in losing money which has an obvious and undesirable long-term result. We can provide a superior sales environment and selling process, better merchandising, advertising and promotion and those efforts will certainly produce benefits and are worth pursuing. But without the underlying correct location, acceptable home design and features, and proper pricing, we are at best merely spinning our wheels while on the inevitable road to failure. Read the rest of this entry »

When my younger son was active in debate he often used the concept of Social Darwinism as a justification for the most outrageous concepts and, while the ideology was disproven decades ago, his opponents were usually unable to defend against the argument and he handily won his rounds.  In fact, although he has not lived at home for fifteen years, we still have several of his debate trophies in his old bedroom, now referred to by us as the “museum”.

For those unfamiliar with the concept, Social Darwinism is a pejorative term used for various late nineteenth century ideologies which piggy-backed on the popularity of Charles Darwin’s new discoveries.  While often contradictory, the philosophy exploited ideas of survival of the fittest as applied to society. It commonly refers to notions of struggle for existence being used to justify social policies which show no sympathy for those unable to support themselves, perhaps similar to some extent to the less well publicized policies currently promoted by the more extremist members of the Tea Party movement. While the most prominent form of such views stressed competition between individuals in free market capitalism, it is also associated with ideas of struggle between social groups and classes. In sociology it has been defined as a theory of social evolution which asserts that there are underlying, and largely irresistible, forces acting in societies which are like the natural forces that operate in animal and plant communities. One can therefore formulate social laws similar to natural ones. These social forces are of such a kind as to produce evolutionary progress through the natural conflicts between social groups. The best-adapted and most successful social groups survive these conflicts, raising the evolutionary level of society generally. 

I was working in a southeastern market last week and, as it had been a few years since I had last visited this area, I was curious to see what changes had transpired.  The community with which I had previously been involved had been successfully completed and sold out but several new developments had opened and I took the time to visit them.

This market is fortunate in that it did not suffer a housing downturn anywhere near as severe as most other areas of the country.  Resale housing prices did not escalate unreasonably and therefore have not fallen substantially.  And new home production was not uncontrolled in the boom years and now is down only about a third from the average of the prior ten years.  There are three homebuilders whose operations I found to be noteworthy, two smaller local builders who are doing relatively well in the market and a large regional builder who is not doing as well.  Read the rest of this entry »

“Common Sense” was an influential revolutionary pamphlet by Thomas Paine, published in January, 1776 in Philadelphia. “Common Sense” avoided abstract philosophy, favoring instead the ordinary language of the day and utilized biblical examples to support Paine’s arguments of independence from England. 

A 1726 definition of common sense is:  “sound and prudent judgment based on a simple perception of the situation or facts”.  Certainly that was valid in Thomas Paine’s time but it appears to me that common sense may have now died throughout the world.  Every day I encounter events and situations that should not occur and certainly would not have occurred years ago.  And although most evident to me within the United States, I believe that this condition, a lack of sound and prudent judgment, has grown into a worldwide pandemic impacting events both minor and major in every aspect of our lives. 

This morning when leaving the house I noticed that a local swimming pool service company had left a “hanger” on my door knob.  Apparently this was their new major advertising push.  Although I have never heard of the company and have no serious complaints with my current pool service company, I am always interested in new marketing campaigns so instead of immediately trashing the door hanger I took the time to read it.  I will leave it to you to make your own evaluation of the quality of the piece, the image of the company that it conveys and the apparent common sense of the individual that had it prepared.  I was certainly not impressed with the hanger or with the implied professionalism of the company and will not be calling them to service my pool and I wonder what the reaction was of other potential customers. 

This past week I thought that I had converted my phone and internet service to AT&T’s “U-verse”. I use the term “thought” as I had completed a phone call with their sales department on Monday.  Tuesday morning a technician first called and then came by my home to perform the necessary outside work.  However on Wednesday I received a call from AT&T’s technical department.  This service is conveniently located off-shore so that I had great difficulty in understanding the three people with whom I spoke but, from what I did understand of the conversations, the billing for my two phone lines had not been “merged” which apparently is a requirement for conversion of service. The technical department could not implement this merge and I was told that I again had to contact sales.  However, after three hours on several phone calls with numerous people which first took me around the world and finally ended up in Florida after that office was closed, and then continued for several hours the afternoon of the second day as AT&T’s phone lines were out all morning, I have no idea what is going on.  Is it any wonder that Comcast is growing at the expense of AT&T? 

BP has managed over the past few weeks to amaze the world with their total ineptitude, first in operating what was apparently an unsafe off-shore drilling facility and then being unable to stop or clean up the worst oil spill in our nation’s history.  By several estimates, the damages now exceed the total value of their company. 

Turning our attention to the homebuilding industry, I believe that the disastrous collapse of the housing market was caused primarily by a widespread lack of common sense.  Homebuilders continued to build when there was no demand; Lenders issued mortgages that had little likelihood of repayment; Wall Street issued mortgage-backed securities without underlying valid assets and FHLMC and FNMA eagerly joined in the party.  Meanwhile our government stood by doing nothing to stop the disaster apparently assuming that common sense would emerge and save the day.  As we all know, that did not happen and even the logical goal of self-preservation of the corporations that were involved and the employees whose livelihood depended on the survival of their companies failed to occur.  Read the rest of this entry »