Land

Manifest Destiny 2.0 Puts Tech To Work As People Seek Better Lives

New geography's new rules circle back to the bedrock rule for all time – one that matches up livelihood and home in as many synchronous ways as can be achieved. People gravitate to where home, work, and means balance best.

Land

Manifest Destiny 2.0 Puts Tech To Work As People Seek Better Lives

New geography's new rules circle back to the bedrock rule for all time – one that matches up livelihood and home in as many synchronous ways as can be achieved. People gravitate to where home, work, and means balance best.

August 15th, 2022
Manifest Destiny 2.0 Puts Tech To Work As People Seek Better Lives
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Enrico Moretti published New Geography of Jobs in 2013 as a futuristic vision. The book tells of how capital, technology, housing economics, and livelihoods could and, in due time, would remap a continental United States originally set up physically to fully exploit rivers, lakes, railroad lines, and coastal ports and gateways as transportation and financial centers.

Little could Moretti have imagined -- let alone fully appreciate – just how powerfully the future was and is now. Theory was and is reality. The changes he envisioned would tentacle forcefully into every vessel in residential real estate's investment, development, and construction forward-aimed focus areas – today, not tomorrow. The pandemic, a money supply explosion, a global supply chain implosion, exponential technology, and exponential technology adoption together ushered a mach-speed pivot from the rules of old geography – namely, physical distribution hubs, financial magnets, research and development sweet-spots, to new rules shaping the new geography – the Great Untethering.

A lone, starkly lit beacon in a speed-of-light-morphing, murky, and mixed outlook for ground-up residential market-rate community investment, development, and construction pipeline planning, now illuminates that new geography's new rules.

Not surprisingly, those new rules circle back to the oldest, most enduring bedrock rule of all – one that matches and attaches one's livelihood and home to each other in as many synchronous ways as can be achieved. People gravitate to where home, work, and means balance best.

Location, location, location is never static, but infused now with a pandemic accelerant, its new meanings are in their very early innings.

The wild card, of course, is modern technology. Exponential technology means an all-directional cascade of capability thanks to ever-cheaper, ever-more-powerfully produced microchip, sensor, and machine learning skill-sets.

It also means something else, equally important. Exponential technology applies not just to tech, data, robotic, automatic, and AI-fueled solutions. It applies as well, and as meaningfully, to the adaptive uses and new expectations and demands people attach with every solution that surfaces.

It doesn't just transform work from home or some other non-office remote point. It changes accomplishment, creative and economic contribution, collaboration, etc. It changes capability from remote locations – far different than saying that technology enables work-from-anywhere.

Which brings us to the moment's big opportunity for homebuilders and their business, investment, development, planning, manufacturer, and distribution partners.

Most new homebuilders, Tim Eller, former Centex ceo and now an advisor with Encore Housing Opportunity Fund would say, need to be part of a rinse-and-repeat plotline to prosper. That plotline – especially as a housing and economic reigniter – typically allows homebuilders to reset their variable [and fixed] costs low enough by trading on deep discounts in land and labor  to make themselves both high-rent refuges and existing home headache relief.

"Relative affordability" was a story – told again and again in housing cycles past – of running too hot and then cooling by comparison with new-homeownership's alternatives. [Think of the old punchline about not having to outrun the bear, only having to outrun one's companion also running from the bear.]

The plotline's calculus was simple. Bring the first-cost of buying – down payment, plus monthly payments – a new home within easier reach of people fed-up with high rents or resale home headaches and turn up the volume as the playing field tilted persuasively toward new homeownership.

Now, two of the necessary plotline conditions – an intensifying need for refuge from spiralling monthly rental payments as well as a greater urgency for relief from a host of headaches on the home resale front – are wholly activated.

Alas, the Great Recession failed at two crucial jobs of any housing cyclical downturn. Neither land costs nor skilled frontline workers came back in sufficient abundance to reset terms low enough for builders to narrow a household's spread enough from high-rents to more manageable monthly payment power ... not in their core A and B lot corridors, anyway.

Now that challenge – made doubly-difficult in a period of input cost inflation and building-cycle chokeholds, where a $5 part can hold up completing a house –

What Covid, the Great Untethering pandemic remote work response, and the Great Resignation statement by hordes of American workers who quit their jobs beginning in January 2021 together unleashed is a latter-day Manifest Destiny, pulling across state lines, regional boundaries, etc. toward an opportunity to live better, more balanced, less anxious lives.

For many of the more than 50 million who’ve quit their jobs since the start of last year — a wide-scale phenomenon known as “The Great Resignation” — the shift has represented a moment of great personal exploration. Finally afforded the space to consider what matters most, some are now reconsidering their work-life balance.

Still, many experts imagine a showdown brewing between employers and their paid team members. Prospects of economic contraction, mass layoffs, dramatic unemployment rates, etc. are viewed as a cudgel of leverage for employers keen to bring associates back into the office.

And it may be the case that employers regain greater sway over in-office attendance. But very likely it will not work like the flip of a switch, especially since part of the proof-case of the past two-plus years is of team members showing even greater capability – igniting productivity, creative solutions, and financial profitability – in remote locations.

So going back now to Tim Eller's homebuilding cycle plotline, what homebuilding firms and their partners need to do to thrive – as refuges from high rents and relief from existing home headaches – is to continue to stand apart by playing to their strengths in less expensive land positions like secondary and tertiary markets, and to bend their average selling price curves closer to the wherewithal of their would-be buyers.

Sinking confidence among homebuilders, as measured by the National Association of Home Builders/Wells Fargo Housing Market Index, illustrates how blurred and treacherous the pathways are to becoming a high-rent refuge and a resale headache relief.

Remember, relative affordability means outrunning your companion, not necessarily needing to outrun the bear. What it also means is that bending cost curves toward household incomes is not the only way to achieve it. The other equally valid way to achieve greater relative affordability is to bend your customer's payment power curve up to the bar of attainability.

That doesn't necessarily giving your customers a raise at work either. It can mean:

  • finding ways to defray relocation costs for those who are moving – Manifest Destiny – to markets where they'll have greater payment power.
  • Same-property revenue unit(s) – ADUs, Multi-gen casitas, AirBnB apartments, etc. – give homebuyers more monthly payment power.
  • design home office capabilities and livability flow seamlessly into home floorplans, for both connection and privacy, to amplify high achievement and ongoing validation of remote contribution, collaboration, and business alignment.

Consumer households' impetus to move and discover new places that offer improved livelihood and life opportunity – a crucial factor of which is a chance for financial gain – continues to sculpt America's new geography of jobs.

It's just that Covid came along and compressed and sped up what in all likelihood would have been a couple of decades in the making into a two to three-year period.

For homebuilders, that ongoing  transformation means the recurrent plotline – standing out as refuge from high-rents and relief from existing home headaches – is still in play.

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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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