When in doubt, take the “A” train

For those of my readers who may not be into Jazz or are younger than I (that would be the majority), “Take the ‘A’ Train” is a jazz standard by Billy Strayhorn that was the signature tune of the Duke Ellington orchestra and is arguably the most famous of the many compositions to emerge from the collaboration of Ellington and Strayhorn.  Composed in 1933, after Ellington offered Strayhorn a job in his organization and gave him money to travel from Pittsburgh to New York City, Ellington wrote directions for Strayhorn to get to his house by subway, beginning “Take the A Train.”  Interestingly, NASA honored the composition with the creation of the A-Train satellite formation which placed 5 satellites in sequential orbit, providing scientists with different sets of nearly simultaneous observations so they were able to improve their study of climate change.

There was an interesting article posted today on Reuters.com with the headline “Homeowner confidence fell in second quarter: Zillow”. The story went on to state that “Homeowners were less confident about the value of their homes in the second quarter, with one-third believing home prices had not yet reached a bottom…Nevertheless, a significant number of homeowners said they planned to put their home up for sale in the next six months if they saw signs of a real estate market turnaround.”

I was sitting in a community sales office today waiting for the sales team to finish their morning chores.  This community is well conceived and professionally marketed and continues to maintain a healthy sales pace and profitability for the developer and the homebuilders.  When the sales team and I got together I started our discussion by sharing this article with them and asking their opinion.  Universally, the immediate response was negative, ranging from “that’s why we are having trouble selling Windstone (a move up village)” to “it seems that this bad market will never end”.  

My immediate thought was “we need a new sales team”.  But after a moment’s reflection and recognition of the reality of the marketplace today, that thought changed to “we need more sales training”. Continue reading

THERE ARE MANY EGOS BUT ONLY TWO “ME”s IN HOMEBUILDING

While at sea a captain of a steamship hears a distress call, “Captain, captain you must alter your course by ten degrees, you are in danger of collision.”

To which the captain replies, “I am at the helm of a mighty steamship sound and sturdy.  I say to you, if my path endangers you, you should alter your course as I will not.”

The voice once again cries out “Captain, captain you must take heed and change your course by twenty degrees, you are in danger of collision.”

The crusty old captain replies, “I am at sail and will not change. I am in command of a mighty and fierce steamship.”

The voice replies, “Yes, you are at the helm of a steamship, but I am sitting in a lighthouse.”

Ego

There appears to be a surfeit of egos in the homebuilding business, each loudly protecting his or her “me”.  But there really are only two “me”s that matter.  The first and most important “me” is the homebuyer for without sales there is no homebuilding business. The second “me” is the homebuilder, the individual or company who has the vision and who has incurred substantial risk and is therefore entitled to make the decisions.  But there is no “me” in team, which comprises the rest of the homebuilding cast of players, unless you jumble it up, get it backwards and allow the egos to run free.

I vividly remember an incident several years ago that occurred while sitting in the Milwaukee airport for a meeting with my builder/developer client and one of the country’s most prominent residential architects.  I had not worked with this architect before but had seen his work and was impressed.  The purpose of the meeting was to review the architect’s first pass concept designs which had been prepared after he had been furnished with my development strategy and surveys of the property.  Instead of first sending out the concept plans for review by the team, the architect wanted to make a personal presentation so this was both my client’s and my first look at the plans.

The property was an attractive in-fill site located in an established suburban bedroom community surrounded by 20+ year old larger single family detached homes.  Based on my research I had recommended a clustered duplex product for the local empty-nesters, believing that this housing would fit in well with the existing neighborhood and satisfy the needs of the target market. Imagine my surprise when the architect’s plans detailed linear row townhomes with 18’ widths. 

At the time I was a relative newcomer to consulting (although I had been in the homebuilding business for twelve years previously), and as this architect was one of the most visible nationally, I chose my responses very carefully.  I asked if he had read the strategy and agreed with the research on which it was based;  If he had done any work previously in this specific market;  And why had he chosen this specific product type and design.

His responses were: “I only skimmed the report as I knew what would sell from my experience. My design has done well in similar markets (suggesting that the Washington, D.C. metro area was a similar market to suburban Milwaukee). And I have done work all over the country and won countless awards”. 

I then asked why he believed it necessary to create a product with double the recommended density when the land cost did not require it and why he thought that empty-nesters moving out of large single family homes would accept a dense and narrow product with such inherent design limitations as a second floor master bedroom and an 8’6” x 8’6” dining room.  He responded “This plan has sold well wherever we have used it – are you questioning me on what to design?” Continue reading