Building Business

Building Business

Two years ago, at the height of the global financial crisis, investor Warren Buffett pulled out this gem of a quote to describe the situation. “It’s only when the tide goes out that you learn who’s been swimming naked.”

And while this is an accurate expression of what happens to weak businesses when there is a downturn in the business cycle, it seems particularly apt as a description of the builder market before and after the housing market bubble burst.

Demographics locally have always figured into a builder’s planning. Nationally, demographics do something different. They help paint a picture of a housing market in the aggregate. Major trends and themes emerge from these national statistics. Over the last 15 to 20 years, legal immigration and the massive shift toward western and southern states have substantially impacted home building, while a third trend, the high home-owning progression of the Baby Boom generation has thoroughly dominated the industry.

In 2004, I wrote a column marveling at the effectiveness and exceptional liquidity of the mortgage market in the United States.

In particular, I admired the ‘creativity’ of mortgage bankers to find new ways to put home-improvement and new construction dollars into the hands of homeowners.


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