Marketing & Sales

In A Quest For Value That Can Override Anxiety, Mind The Gap

A market reset -- given that favorable lending rates may be off the table for an indefinite time -- will come when builders evolve new ways to give household more 'say' in how they want to live in their home.

Marketing & Sales

In A Quest For Value That Can Override Anxiety, Mind The Gap

A market reset -- given that favorable lending rates may be off the table for an indefinite time -- will come when builders evolve new ways to give household more 'say' in how they want to live in their home.

October 28th, 2022
In A Quest For Value That Can Override Anxiety, Mind The Gap
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When will the next housing inflection come? What will catalyze it? Unknowns, but here's something to work to an advantage in the meantime.

A digression.

Unicorn envy was a thing; now not so much.

Everybody wanted a startup or fast-tracking tech company valuation. Now, it seems money has to be earned again, and sticks and bricks don't appear to have gone the way of the dodo. A business model means more than a vague kind of scalability and a pitch deck that "controls the narrative." The extraordinary hoops consumer durables firms had to jump through to get looked at as a technology or data juggernaut may now have run their natural course.

Staying power is the new superpower. Having a business fit for shock and stress will be the envy of any private sector concern, whatever the asset class. Homebuilding and residential real estate companies of all stripes have practice at this. The fact that a majority of the leaders in this multi-trillion-dollar housing ecosystem are in their 50s, 60s, 70s, and then-some, means that staying power through the worst of market conditions has proven out time and again through the worst of housing cycle downturns.

As always, housing will likely lead the way to a next fundamentals-driven recovery, and it's the staying power of  leaders and team members who've been cycle-tested through a couple of boom and bust swings who'll reset stability where there is none right now. They've done it before. Business leaders in other sectors that are reeling right now will likely look to people in housing as the kind of determined, stress-tested talents they want on their team or as partners.

Welcome to the Great Resilience – the period most, but by no means all, homebuilding and residential real estate firms navigate a narrowed pathway to business viability and eventual prosperity in a duration that will put their staying power to the test.

However, contrary to what most suppose, the next housing upturn will not likely attest to a rule that "demographics is destiny," nor that the collective masses will suddenly mobilize due to "forces" that require them to buy new homes.

A known but under-appreciated macro behavioral driver in economics will play a bigger role than the blunt social tool of population, household formation, and family formation demographics considered as the bulwarks of market-rate housing demand projections. Increasingly, people's household and consumer behavior will be less a function of demographics and more a function of their experience of agency.

The inflection will come first among people that smart homebuilders can offer "a say" in what their evolving lifestage looks like and how it works, economically, healthwise, socially, and at leisure. When it comes to a new home, people won't want to pay for what they don't value there, and will pay for what they value most.

Simply, when it comes the notion of having a say, we see and hear it talked about as a sense of "agency" in an increasingly "self-service" consumer and business-to-business economy.

Stanley Heinze, a neuroscientist who works out of Lund, Sweden's public research Lund University, has made his life's work the study of insect brains and their sense of direction. Heinze's groundbreaking experiments detail how bugs – including monarch butterflies, bumblebees, and flies – accomplish stunning super-navigational feats across space, time, and sundry natural and artificial impediments.

A focus Heinze's learning in more than a decade's applied research offers homebuilding business leaders facing painful choices in a market where homebuying customers' motivations and wherewithal have gone into limbo important wisdom about what it will take to re-couple people and households with demand to purchase new homes.

A conclusion Heinze reaches in his studies is this, and it applies to the tiniest and most primitive of brains, and the largest and most evolved brains – the minds of humans.

The job of a brain, he says is ....

To take sensory information, and use it to generate an estimate of the current state of the world, and then to compare it to the desired state of the world … if the two do not match, compensatory action is initiated, which is what we call behavior."

Our primal "fight or flight" reflexes stand out as a good example. Our brains – via our eyes, ears, and 6th sense, instantaneously assess a "current state" versus a "desired state" and then send us an impulse to behave in one manner or the other.

That gap between "current state" and "desired state" is a crucial one for the eventual inflection that will cause more people to "home in" once again on the value a new home and a new home neighborhood offer that is irreplaceable.

When it comes to "homing in" on a place that promises sanctuary and safety, security, privacy, comfort, peace-of-mind, health, and well-being, people – like other species – are super-navigators. They'll know transparency not when you tell them that's what they're getting, but when they feel it's the case.

Mind the gap.

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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