Let’s face it, time are tough, and many home builders are doing all they can to keep their doors open amid the brutal economic conditions. But, while the housing market outlook may look bleak on a national level, there are countless success stories of builders that are succeeding in the toughest conditions. I’ve asked two such builders — Michael Maples, co-founder of Trumark Homes, Danville, Calif., and Brett Whitehouse, president of Brandywine Homes, Irvine, Calif. — to share some of their leadership advice. Here are some techniques that have worked for them.
The media has been talking about how the Fed has to be careful not to let inflation get "out of control" in the coming months and years. In fact, just last week, there was a headline talking about how another round of Quantitative Easing (QE2) bringing the risk of "unleashing 1970s inflation genie." Mortgage Bonds are trading lower on what appears to be a changing sentiment towards the risk of deflation.
Big move by NARI last week: the trade association has hired a lobbyist to represent remodelers' interests in Washington, D.C. This is all part of a great transformation at NARI as the group really works to become a bigger force not only inthe industry but forthe industry. Sure, NAHB has a very significant presence in D.C., but representing builders takes up a lot of their attention. It's great to see NARI get in the game. And the more people out there advocating for housing the better!
The entire market of private debt and equity financing is playing a much larger role in the development and homebuilding space than ever before, and with the banks on hiatus, (for the most part) private financing and equity Joint Ventures are likely to the New Normal.
“I hear and I forget. I see and I remember. I do and I understand.” — Confucius
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.
Since 1993, Professional Builder and the NAHB Research Center have teamed to sponsor the National Housing Quality Awards — the highest recognition in the housing industry for quality achievement. The NHQ Awards represent the best of the best in quality-driven home building companies, and the 2011 class is no exception. All three winners — Charter Homes & Neighborhoods, Haseko Construction, and Wathen Castanos Hybrid Homes — employ numerous quality management best practices. Here are a few particularly interesting best practices that caught my attention:
I just finished a day in Australia, working with suppliers and trades in one-hour Lean meetings. Guess what? If not for the accent, local terminology, and slang, you’d never know the Aussies from the 60 U.S. and Canadian homebuilders and their more than 1,500 suppliers and trades my team has worked with over the past four years. Their issues are the same: schedules, coordinating deliveries, sequencing trades, communication, PO processing, plans, specifications, etc. And virtually everything, just like back home, is eminently fixable given some good process and the will to change.
For more than 20 years, I have traveled the U.S. and Canada almost weekly. One-hundred nights or more in hotel rooms is not so much fun, but meeting the people and learning about the myriad of methods used to both build homes and manage companies is a continual challenge that more than compensates. Helping these same people become more profitable has paid the bills and put four kids through college, and I’ve made more friends in more places than anyone I know. (This became more important than I ever could have imagined when I need a new kidney awhile back.
The PCBC show held its first Capital Markets Forum in June. The program was well attended and many of the industry’s top financial experts were on hand. Here’s a roundup of the highlights from the event:
In the race to reduce energy use and carbon in the residential housing arena, I’m concerned that we’re playing down the importance of indoor air quality in homes. One of the reasons green building took off in the marketplace the way it did is that green treated the house as a system. According to market research, the second most important driver for homeowners to buy a green home is improved indoor air quality, especially when children are in the house.
Want an excellent book to read? Try Dov Seidman’s “How: Why How We Do Anything Means Everything... in Business (and in Life).” This book wonderfully describes how products and services can easily be copied by competitors. The only “thing” that the competition cannot copy is human behavior — how you do what you do. As such, Seidman theorizes that the only way to consistently outperform the competition is to out-behave the competition.
The scenario is all too familiar to builders that have lived through multiple economic recessions: The moment the housing market dives, banks and lending institutions come calling. Literally overnight, real estate investments that weeks (or days) before were financially sound deals are now high-risk ventures — at least in the minds of Wall Street bankers and those in the banking community.
Big move by NARI last week: the trade association has hired a lobbyist to represent remodelers' interests in Washington, D.C. This is all part of a great transformation at NARI as the group really works to become a bigger force not only in the industry but for the industry. Sure, NAHB has a very significant presence in D.C., but representing builders takes up a lot of their attention. It's great to see NARI get in the game. And the more people out there advocating for housing the better!
Hoping for something provocative to read on a long trip, I picked up a book of short essays by Kurt Vonnegut. I have always felt an unwarranted kinship to him simply because I recall going to Vonnegut Hardware in Indianapolis as a kid with my dad, where Kurt worked summers growing up. In his controversial novels of the ’70s and ’80s, Vonnegut had a talent for penetrating to the heart of an issue in irreverent ways — so poignant that you feel like laughing and crying at the same time. He is the closest thing to Mark Twain since, well, Mark Twain.
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.
Transformative experiences are for those who are on a quest right? Climbing Everest or sitting in a Buddhist monastery or, I don’t know, bungee jumping?
THE MARKET Surely the most important issue facing everyone in the homebuilding industry, indeed every industry today is improving performance. Reducing costs and leveraging resources to improve profitability.