The deadly sins of homebuilding

I believe that we are all products of our environment. I was born and raised on the “south side” of Chicago, memorialized in Jim Croce’s 1973 song Bad, Bad, Leroy Brown, and much of that heritage remains with me today.

Perhaps the greatest influence on the development of the south side was the steel mills. First was the U.S. Steel South Works followed by Youngstown Steel, Republic Steel, Bethlehem Steel, and LaSalle Steel. At its zenith, South Chicago helped make the Chicago metropolitan area the leading producer of steel products in the nation. The employment opportunities within the Chicago steel industry stimulated massive immigration in the early 20th century and the south side became a mélange of cultural influences due to its rich ethnic diversity. During my formative years I enjoyed the opportunity to learn about and appreciate cultures beyond my own and I was exposed to cuisines from around the world which shaped my palate and food tastes forever.

Much of the population on Chicago’s south side was Catholic, including large components of Irish, Polish and Mexican residents and the church permeated every resident’s life, regardless of whether or not you were a member of the flock. I will always remember that I lived in “OLP” (Our Lady of Peace) Parish and, although I was not Catholic, my friends drafted me into their church choir for one year as they apparently needed voices regardless of the owners’ religious beliefs. Festivals celebrating various saint’s days were universally attended and Fridays were meatless, including grilled cheese in the public school cafeteria (although my preference has always been pepper and egg sandwiches).

I was constantly being cautioned by my friends against sin and warned about the prospects of hell if I did not change my ways. The Catholic Church typically divides sin into two categories: venial sins, in which guilt is relatively minor, and the more severe “mortal” or “deadly” sins which include wrath, greed, sloth, pride, lust, envy, and gluttony. Although I must admit that I was not immune from all of these, I managed to survive my youth and have so far avoided the prospect of a very warm end although I do live in Florida and it is hot here now. But who knows the future.

I would suggest that the original deadly sins have equivalents within the homebuilding industry and, while probably not recognized by theologians, are usually equally fatal. As the housing markets return, we must be certain that we have put these sins behind us so that we are ready to take advantage of the prosperity that is available in the future. Continue reading

AND THE TRUTH SHALL SET YOU FREE

I originally wrote about “truth” in January of last year but the events of the ensuing twelve months have convinced me that the subject is worth revisiting.  My missive today is not about religion, the well know source of the title, nor about politics, where this quote is often applied and, in my opinion, applied incorrectly.  Rather, I would hope to share with my readers some basic truth about housing and the homebuilding industry.

The national media continues to harp on the negatives that continue to plague housing including foreclosures, shadow inventory and one of their favorites, minor monthly fluctuations in the S&P Case-Shiller Index.  If one looks hard enough, there is always some statistic that can be found that, with a little creativity, can be used as the basis for a prognostication for doom and gloom. 

And although all of these reports and the data on which they are based may contain some elements of truth, none of them contain the whole truth nor are they sufficient on their own to base a realistic forecast for housing in general nor for the homebuilding industry.  Certainly there continue to be a significant amount of foreclosures on the horizon and an equally troubling high number of underwater mortgages that likely will become foreclosures or, at least, short sales at discounted values.  It is also reasonable to assume that the Case-Shiller Index will continue to show monthly fluctuations and in some local markets, even ongoing declines in value.  But there is no doubt in my mind that for the vast majority of housing markets around the country, 2011 will prove to be the start of a long lasting recovery for housing and for the homebuilding industry.

The basis for my belief is very simple and arises from four simple facts (truths): Continue reading

WE NEED MORE TRUTH IN THE HOMEBUILDING INDUSTRY

You can't handle the truth

Perhaps I pay too much attention to what occurs in our industry but I have recently noticed a number of situations in the homebuilding business where the truth seems to be lacking.  I am not suggesting that the people involved were actually lying but, rather, that when the truth needed to be told it was conveniently not volunteered.  So that would seem to me to make these situations “untruths” by virtue of omission.

Although Colonel Jessup (A Few Good Men, 1992) suggested that we can’t handle the truth, I would disagree.  Not only can we handle the truth in the homebuilding industry, we cannot survive and prosper without it.  We need to hear the truth every day and listen to it every single time. 

A builder who is active in one of the markets in which I work fired his real estate broker last year because he was unhappy with the sales staff consistently bringing in “low-ball” offers. The builder reportedly interviewed six different firms before selecting the one that appeared to him to have all the right answers yet the new sales team soon was bringing in the same “low ball” offers.

Continue reading