The Marriage Between a Successful Builder & Building Product Manufacturer
Metrostudy hosted our quarterly consumer focused housing webcast “The Marriage Between a Successful Builder & Building Product Manufacturer.” David Cobb, Regional Director in Florida and former home building executive, provided an economic and national housing market update. He relayed that job growth, one of the major factors feeding the housing market, has slowed, but remains healthy. Household formation growth continues and high consumer confidence persists. Inflation and its impact on rising mortgage rates threatens the strength of the housing market. However, if household income growth materializes, it will minimize the effect of increased rates.
Metrostudy’s data reveals continued strength in the housing market with housing inventory at or below historical equilibrium in most markets. Current and future lot supply is at a 7-year high, but with housing starts well below the 50-year average, undersupply of homes constrains market growth.
To combat rising costs, builders are offering scaled-back homes with fewer options and upgrades. Buyers are gravitating towards smaller homes to maximize their dollars. Stan Deringer, Vice President of Operations for GFO Home in Austin, shared his vast experience to inform building product manufacturers (“BPMs”) on how home builders analyze and select vendors. Stan reiterated the importance of enhancing relationships between trade partners and builders. Not surprisingly, cost is not the deciding factor when considering a product. Rather, it’s value, which is a function of quality and cost. He urged BPMs to convey the compelling value of the product they are selling, and to do so in a clear, concise manner. Finally, he recommended leveraging existing relationships so as not to expend energy on building new ones. As with many industries, referrals and word of mouth endorsements speak volumes.
Paige Shipp, Metrostudy’s Consumer Segmentation Expert, demonstrated how BPMs can capitalize on Metrostudy’s survey data to better understand the builder. By delving into the builder’s market share, communities and product offerings, trade partners can discover details about the builder’s business. Furthermore, walking the builder’s models provides insight into their brand and product offering. Paige concluded with identifying the home builder’s buyers by consumer group. Since each group has distinct wants and needs, they perceive product value differently. Trade partners can leverage this knowledge to further relay the value proposition to the builder.