Halloween is over for 2011 but it’s still spooky out there for the homebuilding industry

In anticipation of this Halloween as in the past few years, my wife and I again stopped at Costco and picked up cartons of individual packages of Famous Amos cookies.  Apparently these are big hits with the area kids as we seem to get a larger number of “trick or treaters” than our neighbors and several of the children remember us from year to year and make it a point to stop at the home they refer to as the “cookie house”. 

As we were wandering in Costco we were reminiscing about Halloween when we were young.  My wife grew up in Long Island, New York, a neighborhood of single family homes very similar to where we live today where she walked door to door to collect her goodies.  I, on the other hand, grew up on the “South Side” of Chicago, an area of rental apartment buildings, primarily six flats with secured entries, so the process of trick or treating was more challenging as we had to find someone to ring us in.  One year my friend and I “went for the gold”, ringing bells in a seventy-unit high rise apartment building and, to our surprise, someone actually buzzed us in. As few of the other kids in the neighborhood ventured into this building, perhaps deterred by the several signs proclaiming “private property” and “no solicitors allowed”, we hit the jackpot, filing our bags to overflowing.  One resident, an “older woman” as I recall (probably younger than I am today), was truly pleased to see us and had baked huge chocolate cupcakes, the best treat that I have ever received on Halloween.

How different things are today!  Back when we were kids, we walked around the neighborhood into the evening on our own.  Today, parents stand at the sidewalk keeping a watchful eye on their children.  In our day, we accepted anything that was given out without concern for possible safety – the homemade cupcakes were gladly received and were excellent!  Today, only treats in the original manufacturers’ sealed packaging are accepted and those are then carefully inspected by parents to detect possible tampering before being transferred to the children.

The world of homebuilding also is a different place today.  Housing values remain depressed in many markets; the media continue to forecast doom and gloom and consumer sentiment is still uncertain.  Household formation patterns have been stunted, buyer profile segments have changed, employment trends are shifting daily and retirement migration patterns have stalled. Competition has become increasing stronger as the larger regional and national builders have been able to buy distressed land at bargain basement prices and pass those savings on to their buyers to dominate the “price” position in many markets.

Yet throughout the country, those builders and developers that have done their research and created and implemented intelligent strategies are achieving success and several are poised to reach record sales and profits this year even in the midst of the current challenges.  These successful members of the homebuilding industry have each created a viable USP to which their markets have enthusiastically responded.    

There is no universal recipe for success.  Each market is different, each market has specific local conditions and challenges that must be intelligently analyzed, addressed and solved. Each market requires attention to the five “drivers” of market share, “Place”, “Product”, “Promotion”, “Price” and “People”, and a creative and realistic optimized balance of those factors that provides personally meaningful and compelling reasons for each buyer to purchase now.

These concepts are discussed, analyzed and explained in detail in the IRM II course presented by the National Association of Homebuilders through the Institute of Residential Marketing and are well worth the investment of time to attend. 

It is nice to reminisce about the past but for homebuilders and developers to fail to recognize and respond to the fundamental changes that have occurred in our industry is a recipe for certain disaster and failure.  The fact is, the business of homebuilding can be spooky today – there are all sorts of goblins, ghosts and ghouls waiting to pounce on the unprepared and unprofessional builders and developers.  So let’s all take the time and make certain that we are fully prepared for success so that the future will be filled with treats, not tricks.  But that’s just my opinion.

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