Leadership

As Housing Weathers A New Market, A New Normal Awaits

It's on the leaders of homebuilding and their partner organizations to envision and stand for a new normal on the other end of bumpy, choppy, iffy market conditions ahead.

Leadership

As Housing Weathers A New Market, A New Normal Awaits

It's on the leaders of homebuilding and their partner organizations to envision and stand for a new normal on the other end of bumpy, choppy, iffy market conditions ahead.

April 13th, 2022
As Housing Weathers A New Market, A New Normal Awaits
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Headlines these days. They're the bane of a strategic business leader's waking life, and the reason for sleepless nights as well.

Without them, markets might behave naturally. With them, adverse market conditions self-fulfill and take on a life of their own. After the panic-stricken, end-of-the-world headlines in February and March two years ago, homebuilding's strategic business leaders may feel as though they earned their way to a pass on headline risk this time around. In the crux of all that seemed upended ...

  • Consumers strongly embraced new homeownership as a haven of well-being
  • Millennial adults shifted into high-gear in their housing choices
  • Uncle Sam stimulus became rocket fuel
  • New homebuilders pivoted technologically to remove friction

The rest is history. In spite of headlines claiming that the sky would fall, the sky became the limit – or rather supply became the limit. And to this day, most new homebuilders have takers for all they can produce, even after pricing impacts that test the elasticity of buyers' budgets. The "there's-never-been-and-never-will-be-a-better-time-to-buy" lamp was on.

And might still well be were it not for those headlines that keep blasting word of a downturn at a moment it's clear that most markets are undersupplied for housing, which is the reason prices have spiralled up so far so fast.

Because the word crisis means what it does, things will get better or they will worsen. There's no steady state in the definition, which is why so often in homebuilding's ecosystem, brilliance and boldness and character come to bear in decisive moments, like now.

  • A housing affordability crisis exists and stands to worsen as inflation and interest rates wedge a wider gap between a growing number of households' payment power and what renting or owning costs.
  • A housing capability crisis exists and stands to worsen if tides of skilled-worker attrition, age-ing out, lack of appeal to people making career choices, and greater appeal of less physically taxing careers continue toward a builder's cliff of human capability.
  • A housing climate impact crisis exists and stands to worsen if every sub-component-level material and process continues to produce carbon emissions that make shelter the No. 1 cause of greenhouse gas impacts.

Opportunity for leaders among homebuilders and their partners – even amidst these chronic crises, and the acute headwinds of inflation, interest rates, supply chain snags, and geopolitical peril – centers on value.

Let's imagine a private sector housing leadership scenario that behaves along the following lines:

To tackle a crisis, leaders must be able to create flexible plans, communicate clearly, lead with compassion, and manage the post-crisis “new normal.”

At this point, housing's market-rate private sector leaders have a choice. They can choose, if they will, to point fingers at policy-makers as the culpable parties for the turbulence, disruption, and pain markets may have to endure to wrestle the worst inflationary period in a half a century or more.

Or, they can participate in solutions and both declare the meaning of and stand for a "new normal" in housing.

In the near-term, many of the higher-volume homebuilders who've spent the past half a dozen years or more trying to ramp up capacity, scale, infrastructure, and increased exposure to more "needs based," younger, lower-price-tiered homebuyers may do well to press pause on that focus.

With an agile pivot – especially when supply chain, lot permitting, and ongoing labor capacity constraint are such strong governors on repeatable volume – builders can deliberately engineer product, community, and finish offerings, for the next 24 months or so – to the more discretionary, higher ticket buyer.

At the same time a clear dollar-investment stand for expanded new home attainability, a business and industry cultural step-up in talent and career building, and a more aggressive, intentional, operational commitment to carbon neutral building construction process, home performance, and community impact would be the "new normal" housing's leaders could roadmap as a light at the end of the tunnel of the current array of crises.

Homebuilding and business partner leaders had a lot on their shoulders as the novel coronavirus started upending life as most Americans knew it 30 months ago. They responded, and quantum leaped a decade of hesitancy in their embrace of technology and management process improvements to virtually remove friction from a homebuyer's shopping and purchase experience.

It's two years later, and the doom and gloom headlines continue. It falls to many of those very same leaders – the ones who'd said COVID was the unprecedented moment of their strategic careers – to shape rather than to be shaped by the market and the economy and the world's current set of crises.

Here's the deal:

After a crisis has abated, you should expect a “new normal”—new processes, strategies, and culture—to emerge. Adjusting to the new normal both emotionally and cognitively may take a while, but it’s your job to help your team recover and heal. Once the most immediate and challenging aspects of a crisis are under control, think about the kinds of crises that your organization is likely to experience in the future. What should you and your team be doing to prepare? What worked well this time, what not so well? Are there any preventative measures you can put in place to keep a crisis from occurring to begin with?

It's on the leadership of housing's most able, influential, and meaningful organizations to envision that new normal where affordability, a new generation of skilled career associates, and a more climate-friendly built environment define a "new normal."

Needs based buyers are there and will be there in 24 months; value based discretionary buyers – and the learning builders undertake now to serve them, iterate, scale, automate, industrialize, and move to more modern manufacturing – will help underwrite that "new normal" where needs-based buyers needs can be met.

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ABOUT THE AUTHOR

John McManus

John McManus

President and Founder

John McManus, founder and president of The Builder’s Daily, is an award-winning editorial, programming, and digital content strategist. TBD's purpose is a community capable of constant improvement.

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ABOUT THE AUTHOR

John McManus

John McManus

President and Founder

John McManus, founder and president of The Builder’s Daily, is an award-winning editorial, programming, and digital content strategist. TBD's purpose is a community capable of constant improvement.

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