Technology

To 'Make Hay While The Sun Shines,' It's Real-Time Or Bust

The moment a trend appears to have taken clear hold on what's coming next, and what should come after that, wait five minutes. Like as not, the complexion may look entirely different.

Together with

Technology

To 'Make Hay While The Sun Shines,' It's Real-Time Or Bust

The moment a trend appears to have taken clear hold on what's coming next, and what should come after that, wait five minutes. Like as not, the complexion may look entirely different.

Together with
April 12th, 2023
To 'Make Hay While The Sun Shines,' It's Real-Time Or Bust
SHARE:
SHARE:

U.S., world, and local economic tectonic plates shift and grind and slide across one another each in separate directions at varying speeds.

Their movements and the consequences of those movements, and the impact of those consequences almost seem to speak of a deliberate intention. One of benign ridicule.

  • To prove predictors – both doom-and-gloomers and rose-colored-glasses-wearers – wrong in the end.
  • To surprise us with knock-on effects – like bank failures, and bank system disruption – that should not have surprised anyone.
  • To force acceptance of uncertainty as a steady-state, rather than as a random interruption in what we experience typically as predictable patterns.

The moment a trend appears to have taken clear hold on what's coming next, and what should come after that, wait five minutes. Like as not, the complexion may look entirely different.

How this ties to a business whose smartest, most wizened, and time-tested leaders almost have to pinch themselves every time they see a new batch of new home sales reports come in is that "way-better-than-expected" is – despite the instinct to do so – exactly the wrong time for a let-down, a celebration, or, worse, a conclusion that "this momentum might not stop on a dime at any time."

Many operators counted on a lot of moving parts as they planned for Spring. Most of the variables they modeled – roughly – divvied up a robust per unit gross margins to fund separate price concessions, mortgage buy-downs, closing cost reductions, free upgrades, etc. to find a price point catalyst for buyers.

Meanwhile, another whole array of moving parts involved taking out as many overhead costs as possible, with the exception of costs of sales, so that each home sale would need to shoulder as little a burden of corporate G&A as possible.

At the same time, another set of assumptions were that, while finishing trade, materials, and products input costs were more or less set in stone for the first few months of 2023, heavy re-negotiation on prices would gain leverage as starts and demand levels shrunk as the months went along and vendors felt a tug of gravity on their future volumes.

Scrap all of that.

Builders, we hear, are beating budget week-in-week-out. Their scrubbed backlogs of buyers are closing with back-to-normal cancellation rates. The concessions, each week – in many cases and in many markets – are laddering back upward toward full- and, rarely, higher prices. Demand indicators are building momentum.

Buyers have made the adjustment to higher interest rates," one VP of Marketing at a multi-regional homebuilding power player. "We're not banking on it continuing, but we'll take it this way while we've got it."

So, many or all of those Q4 budget business planning assumptions that priced in discounts, and slower pace, and, eventually, price concessions on the part of partners through the value chain are fast-fading memories.

Still, it would be too early throw all of those late 2022 business scenarios away. The adjustment to full "make-hay-while-the-sun-shines" mode now need to run parallel with far more conservative game-plans, especially since a long promised Recession appears now to be flashing a hard landing.

"Weird" is the technical term many experts, analysts, and economists have been giving to these times of constantly shifting tectonic plates.

The good news is, in 2023, builders and their partners have come far in the professionalization of their businesses and capital structure, and they've done more than that. Data – not nice-to-have metrics, but rather day-to-day operating measures that allow for agility and nimbleness at a moment that requires them – is becoming a core operating dimension in more organizations.

This will be critical, whether momentum continues on the sales front, triggering more starts activity, and more use of resources homebuilders thought they'd be conserving as they generated cash flow, or not.

Now, more than ever, builders should know how their productivity, revenue, and costs are changing in real-time. That is the baseline for data analysis, and until now, it hasn’t been readily available to many builders. Today’s leading homebuilders succeed by reacting to up-to-the-minute shifts and making smart decisions quickly. Without the access to good data, homebuilders run the risk of missing an opportunity to make timely improvements. We know this is key to the success of any business, and it becomes even more actionable when you can financial and operational comparisons to other well-run businesses.” – Bob Swainhart, VP, Enterprise Solutions Group, Constellation HomeBuilder Systems

The minute you're ready to truly call the market outlook, wait five minutes.

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

Constellation provides fully-integrated or standalone software solutions expertly engineered to manage the complete ecosystem of a homebuilder’s business functions and growth.

Website

MORE IN Technology

Homebuilders: Are You Or Aren’t You In The Flow Of The Building Lifecycle?

On Warren Buffett, and why end-to-end mastery of a 10-stage building lifecycle – mining, sharing, operationalizing, measuring, learning from, and improving on – will ignite success and durability for modern homebuilders.


Tech Hack Matches Affordable Projects With Vetted, Diverse Trades

Tough Leaf makes it easier for developers and builders to meet diversity compliance requirements while mitigating performance risks by pre-vetting the firms in the database.


What Higharc's New $53 Million Series B Round Will Power In 2024

We talk with Higharc's co-founders on what the latest significant capital infusion will mean for an enterprise tapping A.I. to help homebuilders transform how they design, sell, and build new homes and neighborhoods.


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

Constellation provides fully-integrated or standalone software solutions expertly engineered to manage the complete ecosystem of a homebuilder’s business functions and growth.

Website

MORE IN Technology

Homebuilders: Are You Or Aren’t You In The Flow Of The Building Lifecycle?

On Warren Buffett, and why end-to-end mastery of a 10-stage building lifecycle – mining, sharing, operationalizing, measuring, learning from, and improving on – will ignite success and durability for modern homebuilders.


Tech Hack Matches Affordable Projects With Vetted, Diverse Trades

Tough Leaf makes it easier for developers and builders to meet diversity compliance requirements while mitigating performance risks by pre-vetting the firms in the database.


What Higharc's New $53 Million Series B Round Will Power In 2024

We talk with Higharc's co-founders on what the latest significant capital infusion will mean for an enterprise tapping A.I. to help homebuilders transform how they design, sell, and build new homes and neighborhoods.