Leadership

Homebuilders Re-ignite Sales Toolkits As Markets Lose Steam

After a two-year pause-button on all-points, fully-activated strategic selling, now builders are hitting "play," as they work to navigate to a normal demand level they can live with.

Together with

Leadership

Homebuilders Re-ignite Sales Toolkits As Markets Lose Steam

After a two-year pause-button on all-points, fully-activated strategic selling, now builders are hitting "play," as they work to navigate to a normal demand level they can live with.

Together with
June 28th, 2022
Homebuilders Re-ignite Sales Toolkits As Markets Lose Steam
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We haven't sold a house in the last three weeks."

That came last week from the ceo of a mountain states-based privately-held production homebuilding firm. He added that zero sales in three weeks' time is a first in almost two years.

He'd expected different results as recently as 60 days ago. Now, the plans, the budget forecasts, the complexion of business, the outlook of early May seem – in the unique way housing cycles can behave almost like no other consumer durable marketplace – like a lifetime ago.

In that prior life he'd expected maybe fewer multiple bids on every home his firm could bring to market. He'd thought too that the freight-train of average-selling-price increases would likely have to grind to a halt to keep the company's pace of one-home completion and settlement every three weeks on track.

The logic of a return to normal, pre-COVID, pre-stimulus, pre-free-money era buying dynamic is compelling. The structural drivers – constrained post-Great Recession new home output vs. a Millennial generation family- and household formation and a Baby Boom cohort primed to rotate out of long-owned residences for next adventure new-homes – were, and continue to be, self-evident fundamentals.

However, the question now is, will "normal" hold? The data may in fact reveal that interest rates' and inflation's worst-case-scenario impacts may leave all of your core customer universe – and then some – largely buffered and unscathed.

That K-shaped economic convulsion that occurred when COVID hit printed itself in many of our minds as a model for how this next spasm might behave. A lot of people felt the brunt of pain and dislocation, for sure. But most of the new homebuyer universe of households found themselves on a stable footing in their jobs, and could continue to do them from their homes, and now, as a matter of fact, found themselves wanting more, better, healthier home-work spaces.

Like the pandemic's first shock and stress, the recent cost-of-living crisis and the Fed's tightening of households' and business' access and expense to borrow money for mortgages are crushing the payment power of millions of would-be prospective homebuyers. Still, however, many households' wherewithal has been shielded from the worst of these forces, and the talk-track of many homebuilding organization executives is that they're seeing plenty of new-home buying capability out there, undeterred by either price inflation or impacts to mortgage lending costs.

Are they correct? Will pre-COVID pace, price, interest rate levels, etc. set a floor for national, regional, local demand patterns over the next six months to three years?

It's by no means a sure thing. The ability to move every vertical product and every permitted lot you put into work-in-process, matching each to a buyer who's lined up to pay the asking price whatever it may be is now an uncertainty. Demographic destiny and housing scarcity notwithstanding, new homes – $350,00o or $475,000 or $580,000 or $660,000 investments like no other outlays we households commit to in our lives – do not sell themselves.

Homebuilding organization leaders – who doubled-down in Spring 2020 on investment in sales technologies and linkages with lending, insurance, and title firms that removed friction, and took a step-change forward into 2020s-era consumer experience in so doing – have begun to take a hard look at an area of their enterprises' selling capability.

We hadn't had a sales leadership assignment from any of our client companies in two years," says Thomas Carpitella, ceo of executive talent recruitment advisory Fast Tracking Solutions, a The Builder's Daily partner. "Now, we're seeing marketing and sales leadership and management roles popping up out of nowhere, and the focus appears to heavily emphasize brand differentiation, and driving traffic to the communities. We're seeing more of these roles crop up in the past 30 days then we'd seen for the entire time since COVID."

Carpitella notes that whereas six months ago many of FTS's searches were about backfilling for turnover as waves of Great Resignation fever rippled through homebuilding organizations as teammates exited and entered seeking greener pastures, the hires in a post-Federal Reserve lift-off and hyper-inflation era have changed.

Now, it's all about quality and experience," Carpitella says of the leadership and management positions FTS is working to help clients fill. "They know the changing landscape means they're going to need to adapt for a host of new P&L challenges and they're looking for talent they know can navigate narrower paths with fewer resources, and still produce results in these times of uncertainty."

Carpitella's observation that homebuilders are once again keen to re-ignite homebuyer traffic – not only to their virtual sites but to their hundreds and thousands of newly activated new-home neighborhoods – aligns with BDX data that supports this area of focus. While the latest data from June 11, 2022, shows a 31% drop-off in new home searches compared with the same 4-week period in 2021, the "narrower paths" to navigate with fewer resources point to the huge investment builders have made to bring new communities online in the back half of 2022 and through 2023.

As builders bring new communities to market, it has become apparent that Coming Soon communities are of high interest to consumers," says Doug Sylvester, senior director at BDX. "Consumer engagement for Coming Soon Communities consumer engagement is double that for all other new home communities on NewHomeSource.com across the U.S."

The Fed and its acolyte believers are adamant that if they manage switches and levers in their control the economy can navigate a "soft landing." Homebuilders and their support-system analysts and advisors, likewise hold firm to the view that new residential construction activity's floor will be a circa-2019 "normal" level of activity.

We can only hope. But a very smart insurance policy to ensure the best likelihood that "normal" will be the low-point of the current decline, will be to kick-start professionally-managed selling on all cylinders for an uncertain, indefinite, ominous stretch ahead. And, by the way, not just for those households who've endured life in the bottom vector of the pandemic K-Recovery.

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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.

ABOUT

Staffing and recruiting done right. Fast Tracking Solutions specializes in delivering top talent in accounting/finance, construction, and technology operations.

Website

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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.

ABOUT

Staffing and recruiting done right. Fast Tracking Solutions specializes in delivering top talent in accounting/finance, construction, and technology operations.

Website

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With 21 freshly-trained new graduates of a new construction superintendent training, coaching, and career pathing program, the top-5 ranked homebuilder joins Lennar, Pulte, NVR, Toll Brothers, among others, with homegrown project management academies.


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