There was an article on-line earlier this month that forecast the date when print editions of newspapers would no longer be published in each of the major metro areas. New York, Washington, D.C. and Los Angeles were among the few metro areas in which the forecast suggested a life extending beyond two or three years so it would appear that my hometown newspaper will soon be writing its own obituary and I will not be sad when that occurs.
I live in South Florida and used to read the Sun Sentinel, a Tribune publication. My wife still enjoys browsing the Sunday travel and lifestyle sections and perusing the ad circulars as well as glancing at the Friday weekend section to see what movies have opened and read the reviews but I had always preferred the main news and business sections. Earlier this year I decided to simply stop wasting my time as there seemed to no longer be any “news” being reported.
The main headline and front page story in yesterday’s paper was titled “Home Vacancies Nearly Double In S. Florida”. This paper has been featuring stories almost daily for the past two years on the decline in real estate values, the residential foreclosure fiasco, and the death of the homebuilding industry so one has to wonder why this story was news. But more importantly, upon actually reading the article, it was apparent that once again the publication was merely trying for sensationalism as the headline, while true, was very misleading.
The article included a large map, color coded to reflect current vacancy rates in each of the cities within Broward County (Fort Lauderdale MSA) with a key to the chart showing vacancy rates in percentages ranging from “up to 10%” to “42% to 50%”. 9 of the cites showed rates of “up to 10%” which by its very title is prejudiced as 0% would be included in this category; a small inset noted that one town within this category had a vacancy rate of only 3%. 15 additional towns showed rates of 10% to 20% (again, a wide range allowing for substantial disparity) while only 5 municipalities, all of which have high incidence of resort/vacation/second home usage, had vacancy rates over 20%. While failing to mention the fact that South Florida has always had a higher incidence of home vacancies than many other markets due to seasonal usage, the article did mention in the body copy that the countywide vacancy rate was “in the mid teens and rose only a few percentage points (from 2000).”
A national story today, repeated in the local paper’s business section, reported that Lennar‘s stock fell values fell 3.44% yesterday. I have long believed that the action of the stock market is erratic. If not insane, as Lennar reported earnings yesterday that included a profit which would logically suggest that the stock price would rise, especially as the market had already hammered all homebuilder stocks last week after a report that February new home starts and sales had declined. Of course, February is usually the coldest and snowiest of the winter months and this year was no exception so that the Midwest and Northeast would logically see declines in both housing starts and home sales but apparently the stock market did not care to consider the facts.
Two years ago it was reported that we would see 7,000,000 home foreclosures from the “housing collapse” while an article this year suggested that foreclosures represented 40% of all home sales in 2010. Assuming that data is correct, we have probably already absorbed somewhere near 4,000,000 foreclosures leaving 3,000,000 to go which should be absorbed within the next 15 months. That would mean that the homebuilding industry should be in a recovery by mid 2012 but I have not seen a single newspaper story to that effect.
The facts are the economy is improving, unemployment claims are decreasing, consumer confidence is increasing, population continues to rise and the household formations that were deferred over the past few years must shortly come into existence. The homebuilding industry has been under-producing new homes for the past several years based on population gains and even with the increase in “renters by choice”, brought about by the economics of the housing downturn, demand for homes must increase.
However, even with a return of the housing markets, new home sales will continue to be slower than optimal so long as builders fail to provide a product that is truly unique and new. Creating a USP that differentiates new homes from the abundant resales available at bargain pricing is paramount as is appropriately targeting the new buyer segments and pricing to these markets.
Millennials and Gen “X”ers do not want their parents’ old houses – they have different lifestyles and needs and price is only one consideration. Lacking the advantages of close-in locations, new communities must be positioned to provide the amenities that these markets want and can afford. Houses must be more usable, efficient, flexible, green and technologically proficient. And the sales and marketing processes must be refined and re-energized to reflect how these new buyers think, act and live (which has a much lower incidence of buying and reading print newspapers). The homebuilders who have made the necessary adjustments to their operations are already selling homes and will continue to gain market share.
By the way, I still subscribe to numerous RSS news feeds and alerts so I will continue to receive these non-news stories but at least I will no longer waste my time and get ink on my hands reading them in print. But that’s just my opinion.
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