Hire Intelligence: The Two Biggest Threats to the Single-Family Recovery
A stark observation came out of the Land and Capital sessions at the Pacific Coast Builders Conference’s annual meeting in San Francisco last month.
“Housing recoveries,” said one of the capital investment experts on the topic of how much steam the current rebound, now into its eighth or ninth year, has left in it, “They don’t tend to succumb to a slow death of natural causes. [Instead] They die by assassination.”
The inference here is that even if the broader United States economy were to encounter speed bumps, or even dip into a recession within the next couple of years, housing–namely the new single-family for-sale dimension of the residential real estate sector–has a history of weathering such downturns well.
When housing causes a recession, on the other hand, as it did in 2007 and 2008, it’s an entirely different story, the PCBC speaker said, letting the financial Armageddon that played out over the next three to five years speak for itself.
So, the question now, as forces–equally favoring and opposing–each appear to gather power and momentum in a domestic American economy whose brightest promises in a generation could be offset by some of the darkest, most menacing threats of our time.
It’s a true tale of two markets, present and future. Tailwinds of mojo, the likes of which the U.S. economy hasn’t felt in decades have begun to build sustaining energy behind a jobs and growth juggernaut that’s looking more and more like it’s only getting started. Simultaneously, headwinds of doubt and uncertainty–about how much essential materials and products will cost and where they’ll come from and how secure the supplies can be–are roiling up amid a burgeoning, potentially disastrous, environment of global political and trade risk.
For businesses whose purpose, design, and resource investment revolve around the essential need of society to produce shelter and develop regenerative communities the matter of resilience, of future-proofing, if you will, comes down to two issues–each of which could be the cause of the current housing recovery’s “assassination.”
One raw challenge comes down to price. In a larger sense of the word. In the sense of the amalgam of factors that weigh on a household’s means to pay its way and build its future as an economic, social, environmental, and cultural unit. “Entry-level” and “first-time-buyer” descriptions are relevant today only insofar as they characterize the baseline price range in any sub-market by comparison to other price ranges in the same arena.
Are “entry-level” and “first-time-buyer” offerings today what they need to be to serve both business and investment interests as well as society’s need to house people and spark the sustaining flame of economic mobility? Only you and your teams can answer that question, as businesses whose long term viability and ability to thrive may depend, or not, on an expanding rather than a contracting universe of potential home buyers.
Lower prices, lower barriers to “entry-level” might easily be looked at as a social issue, a political issue, and a cultural issue. Our sense, however, is that lower prices are a core business issue that people in this business community wake up to and go to sleep to, whether or not they’re aware it’s there. Either you solve it, or you and your firm are a passive spectator in what happens from not solving it.
Too, the second pure and unvarnished challenge is this. Talent. As in where is that next wave of talent that will succeed the current wave of brilliance, passion, commitment, and shrewdness?
As this morning’s jobs and unemployment rate data from the Labor Department likely will confirm, the nation is at peak levels of employment unseen since the 1960s, when the vanguard of the Baby Boom was only then entering the job market, and two-income households were only just beginning to create the economic tsunami of growth and prosperity that reigned over the following several decades.
The question for home builders, their partners in residential investment, manufacturing, development, distribution, and marketing and sales comes down to this: Do you, would you, could you want your son or daughter or niece or nephew or grandchild to go into this business?
If not, why not?
We’d propose that the two issues connect, or even perhaps inter-depend. For if the new home building and development and investment business sector were, somehow, to unlock the potential of a growing unserved universe of households that are currently priced out of participation, then we’d contend that more of our children and their friends would be drawn into jobs in the construction, real estate development, and management career fields.
The two biggest threats–high prices and a shrinking talent stream–are also the two biggest opportunities for resilience, for regenerative profitability, for innovation, and for viability. Check out this piece from Harvard Business Review contributor Alice Boyes, “How to Focus on What’s Important, Not Just What’s Urgent.” The urgent gets most of our attention, and for good reasons. The important needs to get more of our attention, also for good reasons. Boyes notes.
“It’s natural to want to get deadline-driven tasks squared away and off your mental to-do list. A paradox many people face is that our most meaningful tasks are less likely to have deadlines than tasks that are relatively unimportant. “
We hope this Summer Weekend brings you sales, quality traffic to your models, and positive progress and perfect worker safety reports from your job sites.