Several weeks ago we shared our observations of how the home building industry has changed over the last 25 years. Several of you replied back with you own thoughts. Here's what you had to say:
What I've noticed is more volume builders coming into smaller markets displacing what had traditionally been local builders. I can see a scenario where large portions of a number of markets (even small ones) will belong to volume builders because they don’t face the financing hurdle independent builders do. As I sat at the Presidents round table at a recent State HBA Meeting the remarks from the group had more to do with the inability of their members to get financing (even for presales) than anything to do with their local associations.My sense is that the volume builders will (fill) this void and for the next few years, back away from performing their own development as they capitalize the hoards of developed lots that the developers (or the banks) could never sell to independent builders and will likely partner with developers in the future with some sort of profit sharing agreement – more like merchant banks. — Eric Coffey
I hope that effective construction management will not come solely from the colleges and universities in the future; it just cannot take the place of progressively developed sensibilities in the builder/developer environment. This is a profession requiring the broadest skill set of any I know. — Bill Mayben
I’ve been disappointed at how conventional most builder/developer firms became. Many companies just followed other builders, or a formula– resulting in a series of paint-by-number projects and homes that the consumers ultimately put in one category, and compared solely based on price. In an effort to appeal to the broadest customer base it appears that real innovation and evolution took a back seat. Now, with nobody to copy, they are really stuck. Many actually believe the market will return to what it was, and that they can continue as they were. It appears that the company that is able to innovate may capture the market again. This speaks well for creative architecture, evolutionary home and community design and specification, and offerings that can make a long-term positive difference in the lives of residents. — Bill Mayben
The most important changes I have seen involve the “standardization” of housing plans, specifications, processes, budgeting, workflow, measurement, organizational structure, training, customer relations, and an attempt to commoditize land. As Standardization starts to merge with Centralization of processes and decision making, the opportunity for smaller homebuilding firms to tailor their product offerings and business processes for targeted consumer groups will allow them to compete effectively against larger public competitors. — Peter Tremulis
You were spot on with some of the critical path and relational selling methods that evolved over the years. As you know, some of the "tried and true" formulas are no longer in play. What happens next? Who is seeing around that curve into the future? One small example, how does social networking play into the sales process? — Nelson McDonald
The profile of a Sales Consultant has changed. The top sales professionals today are people who ask the right questions and listen to the answers. Trust is the essential component to build the relationship between customer and Sales Consultant. If a salesperson does not have great listening and problem solving skills, today’s customer will not bond with them. This isn’t much different than what salespeople seek from their own managers. I have interviewed hundreds of Sales Consultants over the years and NEVER has one of them said they want to leave for more money. They want to leave because of how they are treated. It saddens me when I hear about managers who don't value their people or take time to coach their team. It is a talent that is needed to keep a happy, productive and energized team in today’s market. — Millie Regal
In my early years, I kept knowledge of my college degree between my production manager and myself (he also had one). Very few others were college graduates. That changed in the 1990s to being a “must have” requirement for being hired. The same happened on the sales side, too. In prior years, a real estate license would suffice. Design Centers came on the scene as revenue and margin generators. Lastly, the life of a good floor plan grew shorter each year, as new designs & features were demanded. Who would have imagined granite as standard in a Fox & Jacobs home? — Jerry Whelan
Volcker hit the nail on the head. Business school majors are now either all Finance/Accounting or Marketing - very few in Purchasing, Supply Chain, Operations or Management. Everyone wants to “make it” by “manipulating minds or money.” No one wants to produce anything any longer. That is a huge problem. — Scott Sedam
I remember hearing from "old timers" after the crash of the early 80's that business would never be like it was in the mid to late 70's. They were right – it was better. Then came the calls in the early 90's that business would never reach the prosperous levels of the mid to late 80's. Right again they were – it was significantly better. Remember just a few years ago when there weren't enough qualified people around to build the record number of new homes people were bidding up to buy? Now here we are again. Let's just hope that by the time history repeats itself (again), that we've regained a degree of balance at the decision making table. Because without expert input from real home building experts, it could get awfully costly to learn that houses don't just build themselves. — Joe Keppler
There seems to be a significant push in our industry recently to have better systems and processes to compensate for a perceived lack of understanding of what really drives our business: people! There are those who think that if we have the right “Manual” we should be able to execute and achieve success. Instead, the focus should be on culture, training, and enabling people to make decisions, learn from their mistakes and take care of the customers. — Name withheld by request.
The Internet has changed everything. Buyers are more educated than ever and probably know as much about the product and community as the sales agent greeting them. Sales agents need to be perceived as more of a resource in the process (and heaven forbid they actually BE a resource!) Going Green is another big change. Builders must be thinking and building this way (and communicating it better to the marketplace) to be competitive ... especially in the higher end product. Home designs are also getting more and more "open" with space emphasis in the master suites, kitchens, and family rooms. Curb appeal is more important now than ever, certainly more so than in the 1980's. Lastly, master-planned communities have become the best opportunity for a builder to sell real quality of life as a value. This also forces builders to get back to the core of our business– building homes for families, instead worrying about dividends and stock price. — Shane Johnson
What is truly amazing to me is how little we have changed in 25 years. My first computer weighed about 50 pounds and cost $3,200. Today, that computing power can be purchased in any simple electronic device weighing a pound or two at a cost of $200-$300. During that same time, we have not made comparable advances in the homebuilding industry. We still build houses primarily with 2 x 4's, and we waste interior space like crazy. Our energy efficiency is laughable. No other industry would have survived this long without changing their product more than this, and (shelter) is the most important commodity there is, besides food and water. — Ken Mitchell
Our industry has transformed into a “Starbucks” environment (one on every corner), with more of a focus on absorptions rather than profitability. — Eddie Servignon
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