Strategic Residential Marketing

Once again the news media has been filled with stories of the inappropriate word choices that people make, reiterating the need for political correctness and sensitivity.  The Daily Show featured an amusing satirical debate last week on which was worse, the “R” word or the “N” word, and suggested that in today’s stressful environment  people may more often choose words poorly.  In my opinion, the media has got it all wrong.  The only word that really matters is the “H” word.

I got out of bed early this morning as usual and, after completing my shower and other necessary morning rituals, went to wake my wife.  She wanted a few minutes extra in bed so I went into my office and began to read my email.  When I returned after 30 minutes to provide my wife’s second wake-up, I sang her the Nestles’ good morning song which prompted her question of “why was I in such a good mood?”  Without a moment’s hesitation I responded that “it was such a pleasure to see her each morning that it always put me in a good mood.”  Fortunately I was alert and my brain was functioning at that hour as it seems that this was the correct answer.  

After a moment’s thought I realized that I am almost always in a good mood because I am happy (the “H” word) and, even though I am not regarded as the greatest motivational speaker, I wanted to share my analysis of why this is true in the hope that one or more of my readers will find some benefit. 

I am feeling the effects of the economy and the current housing market like anyone else and I am seeing the stress which appears to permeate all of our society.  My business is slower than I would wish and while I am not hurting financially, I am feeling slightly “pinched” as I have responsibilities that I had not anticipated within my personal economic plan. But while several of the factors in my life are certainly not optimal, they do not come even close to negating all of the very positive elements. 

I have been married to the same wonderful person for 40 years.  My wife and I and our families are in good health, even, for the most part, our three “senior women” for whom we are responsible, although two require full-time live-in caregivers.  While there is the unanticipated financial responsibility of the caregivers, we are fortunate in that we have my mother (age 96), my wife’s aunt (age 92) and my mother-in-law (age 90) still with us to share in their love. 

We have two wonderful sons, one fabulous daughter-in-law (hopefully another in the near future) and two amazing grandsons who provide us joy every day.  My wife and I have successful careers that continually stimulate us, challenge us mentally, provide us opportunities to serve within our industries and community, and we are fortunate to have earned the respect of our colleagues and business associates.  And we have good friends to share in our lives.

So I was very happy that I had, in fact, awakened that morning, happy with who I am and what I have accomplished, happy to be married to my wife and happy with my life.  My life is not perfect but on balance it is far, far better than just good.  And I believe that is also true for the great majority of the people in this country and is the only message that needs to get out today, tomorrow and every day, especially to every member of the homebuilding industry.  Our lives are good and we should be happy.

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“When the Going Gets Tough, the Tough Get Going” is a saying attributed to Joan W. Donaldson as well as a popular song originally recorded by Billy Ocean and used as the theme song for the film, The Jewel of the Nile.  I believe that this is now truer than ever for everyone in the homebuilding industry.

Most of the housing markets across the country have reached bottom and are now ready to begin a slow but steady recovery. Household formations are still lagging due to the lack of meaningful employment growth but population growth is continuing at strong levels and will return our industry to health and over 1,500,000 annual housing starts nationally by the end of the decade. 

Things are certainly still tough out there in many places and it may still be as long as three to four years before we see the meaningful signs of a housing recovery in our own markets that will start to “naturally” return our levels of new home sales and our incomes to the levels that we enjoyed just a few years ago. 

Last week a salesperson at a development that I was shopping complained that traffic had slowed considerably since the tax credit ended and she was not selling any homes.  A prospective homebuilder client with whom I have been in contact for several years told me this week that the market was slow and he had decided to “just wait it out”.  And a developer client informed me yesterday that he was not “giving away” his homesites and would just hold on the best that he could until the market returns.

Inaction is simply not a solution; it is a self-fulfilling prophesy for failure. Read the rest of this entry »

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 »