Comments on: IF THE MILLENNIALS ARE RISING, WHY AREN’T HOMEBUILDERS FOLLOWING? http://www.residentialmarketingblog.com/2010/02/if-the-millennials-are-rising-why-aren%e2%80%99t-homebuilders-following/ thoughts on the homebuilding industry by Daniel R. Levitan Fri, 04 Nov 2011 12:13:42 +0000 hourly 1 http://wordpress.org/?v=3.1 By: Bill Ryan http://www.residentialmarketingblog.com/2010/02/if-the-millennials-are-rising-why-aren%e2%80%99t-homebuilders-following/comment-page-1/#comment-95 Bill Ryan Tue, 23 Feb 2010 17:13:23 +0000 http://www.residentialmarketingblog.com/?p=517#comment-95 Daniel: I enjoyed your post. I will get to my answer to the question headlining your post. But first, I would like to focus on a question listed within the text. "So if there is no white knight out there ready to rescue a homebuilder, why is the industry so slow to adapt?" Are you suggesting that adapting to new technologies would rescue today's homebuilders? Homebuilders have always been slow to adopt new technologies. I spent four years running technologies companies. Three of those years, we were developing software for the homebuilding industry. Accounting software predominant in the industry had no brand recognition. Homebuilding is a highly fractured industry. Certainly, from 2000 to 2005, the industry experienced explosive growth, capturing the attention of brand name software providers. Together, they represent a significant market. Unfortunately, most homebuilders are small business. Key 2006 Metrics: Whirlpool $18B revenues P&G: $68.2B revenues Google: $10.6B revenues D.R. Horton: $15B revenues Lennar: $16.2B revenues Top 5 HBs: $70.9B revenues 31st Largest Builder: $925M revenues That said, social networking applications are affordable for companies of all sizes. The industry should embrace your suggestions: 1) Facebook and Twitter pages for each community; and 2) Web concierge. Most homebuilders have employed SEO. The problem in homebuilding is not a failure to adopt new technologies. I dislike hyperbole so I'm not sure what word to use to describe the industry. What is an acceptable word that exceeds "implode?" The industry imploded in 2006. We are well beyond that now. The industry suffers from several systemic problems: 1) The disappearance of the secondary mortgage market; 2) Banks are not lending; and 3) Appraisals are unreliable. The bigger issue is the bid-ask gap in real estate asset pricing. Banks are increasingly becoming the asset holder. The disposition price is higher than the opportunists' asking prices. In Chicago, the market feasibility "guru" is predicting a 2013 revival. If that is an accurate prediction, I'm not sure how many builders will be left standing. Daniel:

I enjoyed your post. I will get to my answer to the question headlining your post. But first, I would like to focus on a question listed within the text.

“So if there is no white knight out there ready to rescue a homebuilder, why is the industry so slow to adapt?” Are you suggesting that adapting to new technologies would rescue today’s homebuilders?

Homebuilders have always been slow to adopt new technologies. I spent four years running technologies companies. Three of those years, we were developing software for the homebuilding industry. Accounting software predominant in the industry had no brand recognition. Homebuilding is a highly fractured industry. Certainly, from 2000 to 2005, the industry experienced explosive growth, capturing the attention of brand name software providers. Together, they represent a significant market. Unfortunately, most homebuilders are small business.

Key 2006 Metrics:
Whirlpool $18B revenues
P&G: $68.2B revenues
Google: $10.6B revenues
D.R. Horton: $15B revenues
Lennar: $16.2B revenues
Top 5 HBs: $70.9B revenues
31st Largest Builder: $925M revenues

That said, social networking applications are affordable for companies of all sizes. The industry should embrace your suggestions: 1) Facebook and Twitter pages for each community; and 2) Web concierge. Most homebuilders have employed SEO.

The problem in homebuilding is not a failure to adopt new technologies. I dislike hyperbole so I’m not sure what word to use to describe the industry. What is an acceptable word that exceeds “implode?” The industry imploded in 2006. We are well beyond that now.

The industry suffers from several systemic problems: 1) The disappearance of the secondary mortgage market; 2) Banks are not lending; and 3) Appraisals are unreliable. The bigger issue is the bid-ask gap in real estate asset pricing. Banks are increasingly becoming the asset holder. The disposition price is higher than the opportunists’ asking prices.

In Chicago, the market feasibility “guru” is predicting a 2013 revival. If that is an accurate prediction, I’m not sure how many builders will be left standing.

]]> By: Marie O'Brien http://www.residentialmarketingblog.com/2010/02/if-the-millennials-are-rising-why-aren%e2%80%99t-homebuilders-following/comment-page-1/#comment-90 Marie O'Brien Mon, 22 Feb 2010 16:46:43 +0000 http://www.residentialmarketingblog.com/?p=517#comment-90 Good post, Dan. The integration of social media reminds me of how the industry reacted to Web site development back in the late 90's and early 00's. I'm confident that it won't take as long to adopt strong social media marketing strategies such as creating a community Facebook page, and asking residents to upload their own community YouTube videos. One of the beautiful aspects of social media marketing is that once it gets started, so much of it is done by residents, friends, realtors, etc. Looking forward to your participation in our ASK THE EXPERTS Webinar on March 8th. -Marie O'Brien, BlueTangerineSolutions.com Good post, Dan. The integration of social media reminds me of how the industry reacted to Web site development back in the late 90′s and early 00′s. I’m confident that it won’t take as long to adopt strong social media marketing strategies such as creating a community Facebook page, and asking residents to upload their own community YouTube videos. One of the beautiful aspects of social media marketing is that once it gets started, so much of it is done by residents, friends, realtors, etc.

Looking forward to your participation in our ASK THE EXPERTS Webinar on March 8th.

-Marie O’Brien, BlueTangerineSolutions.com

]]> By: Mike Lyon http://www.residentialmarketingblog.com/2010/02/if-the-millennials-are-rising-why-aren%e2%80%99t-homebuilders-following/comment-page-1/#comment-89 Mike Lyon Sun, 21 Feb 2010 20:33:11 +0000 http://www.residentialmarketingblog.com/?p=517#comment-89 Mr. Levitan, Wow - love it! So many companies are trying to "game" the system and are missing the opportunity to really connect with prospects. There is a huge gap between the buyer's expectations and what most homebuilders do to meet those expectations. To your point on "people buy individual communities as opposed to a corporate brand when selecting a new home" you are dead on. Of course branding is important, but buyers shop outside in...area, school district, proximity to work. No matter how good your "brand" is, they won't buy if it is not the right house at the right price in the right location. I think you hit the nail on the head for establishing a social media strategy around communities - that is in fact what social networking is...community building in the digital space. Again, love the post! Thanks Mike Lyon Mr. Levitan,

Wow – love it! So many companies are trying to “game” the system and are missing the opportunity to really connect with prospects. There is a huge gap between the buyer’s expectations and what most homebuilders do to meet those expectations.

To your point on “people buy individual communities as opposed to a corporate brand when selecting a new home” you are dead on. Of course branding is important, but buyers shop outside in…area, school district, proximity to work. No matter how good your “brand” is, they won’t buy if it is not the right house at the right price in the right location.

I think you hit the nail on the head for establishing a social media strategy around communities – that is in fact what social networking is…community building in the digital space.

Again, love the post! Thanks

Mike Lyon

]]> By: Gian Hasbrock http://www.residentialmarketingblog.com/2010/02/if-the-millennials-are-rising-why-aren%e2%80%99t-homebuilders-following/comment-page-1/#comment-86 Gian Hasbrock Sat, 20 Feb 2010 21:31:18 +0000 http://www.residentialmarketingblog.com/?p=517#comment-86 Your post is right on target, Dan. The Millennials are rising indeed, but not only as the biggest first-time buyer generation in history. Their preferences will dominate the home buying market for the next four decades as earlier generations embrace a more informal and totally wired marketing and sales process. Those who think the market will come back to 2005 like a bedspring will wait forever for that to happen. Your post is right on target, Dan. The Millennials are rising indeed, but not only as the biggest first-time buyer generation in history. Their preferences will dominate the home buying market for the next four decades as earlier generations embrace a more informal and totally wired marketing and sales process. Those who think the market will come back to 2005 like a bedspring will wait forever for that to happen.

]]> By: Andy Detterline http://www.residentialmarketingblog.com/2010/02/if-the-millennials-are-rising-why-aren%e2%80%99t-homebuilders-following/comment-page-1/#comment-85 Andy Detterline Sat, 20 Feb 2010 00:36:44 +0000 http://www.residentialmarketingblog.com/?p=517#comment-85 Anther great post Dan. Speaking from experience, it is uncomfortable to be "out there" in cyberspace trying to keep up with the communications curve our Millennial Market keeps pushing. Jay is right about the risk of getting it wrong. I think many marketing professionals have a horror of becoming that caricature of the 50-something guy doing the "latest" dance to the snickers of the younger generation. And builders mistakenly believe if they wait a little longer, the dust will settle and the "right way" to do social marketing will become obvious. Wish it was going to be that easy to catch up! Anther great post Dan. Speaking from experience, it is uncomfortable to be “out there” in cyberspace trying to keep up with the communications curve our Millennial Market keeps pushing. Jay is right about the risk of getting it wrong. I think many marketing professionals have a horror of becoming that caricature of the 50-something guy doing the “latest” dance to the snickers of the younger generation. And builders mistakenly believe if they wait a little longer, the dust will settle and the “right way” to do social marketing will become obvious. Wish it was going to be that easy to catch up!

]]>