Posts Tagged ‘homebuilders’

By IMRE Research

After a close race, the country has voted to return President Obama to the White House for a second term. While Democrats picked up two seats and retained control of the Senate with a 55-45 majority, the Republicans were able to keep control of the House, 234 to 197 (some races are still being decided), in spite of gains by Democrats. This division in leadership will certainly continue to have an impact on the pending economic issues lawmakers will be turning their attention to now that the election is over, with the most imminent being the fiscal cliff. But, they return to their lame duck session with bright spots in the economy that were overshadowed by campaign rhetoric. The economy quietly continued to show its resiliency, with a surge in job additions, a healthy jump in consumer confidence and significant gains in the construction industry.
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By Lindsay Muller

Realtor 300x279 Why “why” is more important than “how”A recent Fast Company article stated that “we are at the tail end of an era that has focused almost entirely on innovation of products and services, and we are at the beginning of a new era that focuses on the innovation of…’behavioral business models.’”

The author goes on to say that “these models go beyond asking how we can make what we make better and cheaper, or asking how we can do what we do faster. They are about asking why we do what we do to begin with.”

As marketers, this concept of understanding and then changing behavior is critical. In fact, it’s so critical that we should pause for a moment and think about how we’re conducting business currently and what shifts we need to make to better reach our target audiences.

I was reminded of this concept when I stumbled on a July 6 HousingZone article this week. The article highlighted how homebuilders, developers and even realtors are merging demographic with psychographic market research to hone in on prominent buyer groups. Like the Fast Company article, the piece talked about how understanding the “why” is critical to effectively communicating with target buyers.

For example, a realtor should understand that “traditionalists” tend to be attracted to predictable, formal floor plans, large, private back yards and traditional architecture and design elements. Another growing segment, “Winners With Heart,” are interested in large, open spaces, outdoor amenities and the latest design elements for easy living, like kitchen conveniences and storage.

Once these preferences are determined, realtors and sellers will have a better understanding of how to highlight certain areas of a home over others, which homes to show to which prospects, etc. Ultimately, the process should be more efficient and productive for all parties.

How is your company merging demographic and psychographic research? Do you agree with the concept of behavioral business models?

By Building Experts Team

In recent years, corporate social responsibility has moved from a nice-to-do on the part of some companies to a must-do for many, large and small alike. Some argue CSR is a distraction for other things that could be going on within a company or industry. How does this apply to the big builders?

According to the U.S. Green Building Council, LEED, or Leadership in Energy and Environmental Design, “provides building owners and operators practical and measurable green (sustainable) building design, construction, operations and maintenance solutions.” Since its development in 2000, LEED has many rethinking the places they visit and live their lives.

Habitat Beyond LEED: What Home Builders are (Not) Doing to Better Communities

Aside from LEED, are builders doing much else to support their communities from a CSR perspective? LEED is certainly an internationally recognized bright spot for the industry’s CSR cause so Build IQ took a closer look at what the top three builders in the United States are (not) doing:

1. PulteGroup, Inc.

PulteGroup Inc. highlights concentration in internal (diversity & inclusion), environmental and charitable giving priorities among their CSR activities. The website notes following in the footsteps of founder, Bill Pulte, that “the company is committed to not only building better communities, but building a better world.”

Through charitable giving contributions, PulteGroup seeks to have the broadest reach possible with recent donations in recent years to a Virginia Tech Professorship Endowment for the Department of Building Construction; American Red Cross relief efforts; and Mercy Housing, a national affordable housing organization that serves nearly 55,000 people each day; among others.

2. D.R. Horton, Inc.

D.R. Horton is the only builder among the top three that does not proactively designate any area on their website to how there are bettering the communities where they operate.

In 2011, Horton unveiled a “micro-community” near Portland, Oregon called Division 43. Each home design is built with reclaimed and sustainable materials and share community resources. The community also boasts “reduced reliance on fossil fuels;” energy performance in focus areas of the home including energy efficient lighting, zoned heating and cooling, solar energy for common areas and ENERGY STAR® rated appliances, among other sustainable features.

3. Lennar Corp.

Lennar Corp. states the following community mission on their website regarding community involvement: “We believe in ‘doing the right thing for the right reason,’ and that we are responsible for giving back to our Community, quietly and without fanfare.

Where Lennar differs from Pulte and Horton is that they speak about their employees involvement in volunteerism. Lennar doesn’t simply just shell out cash or practice only sustainable building, they contribute personal time to programs such as Project Opportunity. Created in 1998, Project Opportunity is a unique partnership between Lennar, Habitat for Humanity and Special Olympics.

Project Opportunity builds take place in one city where Lennar has homebuilding operations. “At each Project Opportunity build, Lennar Associates from all of our disciplines, build from one to eight homes in a one-week period in a local Habitat for Humanity Community, assisted by local Special Olympics Athletes.”

In short, yes the homebuilding industry is attempting to bounce back after a historic downturn but do you think they are doing enough in the realm of CSR? As these builders continue their way back, keep an eye on their CSR activities as they will not only look to increase their home starts, but at the same time look to re-establish their reputations within the communities where they do business.

McMansions Back on the Block

By Kyle Rubeling

McMansion McMansions Back on the BlockIt was only two years ago pundits announced the death of the ‘McMansion’ era. Consumers were no longer clamoring for homes over 3,000 square feet as they sought practicality in a recession. Who needed formal landscaping, decorative water features, tennis courts and gazebos? Even homebuilders began to take notice and started constructing smaller homes.

After a brief hiatus, larger homes are making a comeback and they’re even fueling new home sales. According to a recent U.S. News & World report, about 11 percent of today’s house hunters say they want their own McMansions, up from 6 percent last year. As the housing market improves, consumers are becoming more optimistic and builders are taking notice. According to the National Association of Home Builders, more than a quarter of all homes built last year were larger than 3,000 square feet.

Large custom-built homes are also becoming more popular. These homes accounted for nearly 30 percent of all housing starts in 2011, up from 19 percent during the building peak in 2005, according to recent data from the NAHB.

But what’s driving this trend? For one, record-low interest rates, under 4 percent for a 30-year fixed-rate mortgage are allowing some buyers to move up without making larger payments. Others claim it’s cheaper in the long run to buy a big house now and spread the cost over the life of the loan. A third reason could be the house prices themselves. As builders slashed prices, the cost difference between midsize and large homes became more reasonable.

As we approach the dog days of summer it will be interesting to see if this trend continues. Yes, people want big houses. Doesn’t everyone? I wonder if homeowners can manage high energy prices associated with running a home of that size. Can builders construct large housing that is energy efficient while keeping cost at a minimum?

I’d hate to think history repeating itself, but will builders continue to cater to what consumers want or will there be any hesitation or pushback if this trend heads mainstream? I guess we’ll all find out together.

By Shawn Draper

This past weekend my wife and I met with a luxury homebuilder to select products for the new home we are planning to build and I experienced something new. After more than four hours together, it appeared that this national award winning, well-respected luxury homebuilder knew less about trend forward design and products than we did. We reviewed eighteen different builders and interviewed three finalists when selecting our builder. The choice of quality building products was one of the standards we used to determine quality. This single experience leads me to ask “Are homebuilders ready for today’s homebuyer?”build photo 225x300 Are homebuilders ready for today’s homebuyer?

Granted I am an unusual homebuyer in that I work in the building industry, but there were several things that came to mind that made me think homebuilders need to hone their skills and offerings as the homebuyer is better connected, more informed, and expects to move quickly.

For example, the builder uses James Hardie products for siding and trim. This is one of the products we identified as representing the quality of the builder. We were shown dozens of small hand samples and several installed examples of the color and style combinations James Hardie offers. It was difficult to select colors from a small sample and imagine them on the house. We did our best while in the office and then returned home to visit the James Hardie website. The site offers a design program to see the options on the front of various house types. Assuming the colors on the website are true to color, this changed everything. The yellow we had selected onsite was too bright and the second color too pale. The time we spent in the office was wasted and we were left to our own devices to decide what we want. I will be making a trip to the local James Hardie dealer to compare samples with the web photo we created. So, one, the builder should be using the website and samples to assist in the design selection, and two, James Hardie could allow us to upload the front elevation of our design to apply the products and colors to our design. This would make for the best buying experience.

A helpful website is not all that is available to homebuyers. Builders should be aware of and using Pinterest to help with design trends and selections. Kitchen cabinets – style and color – tile backsplashes, countertops, lighting, appliances, bathroom fixtures, hardware, and furniture – indoor and out – are all easily showcased through Pinterest. This allows the homebuyer to see how all of these choices come together. It is also a great place for builders to stay on top of design trends. Our builder was surprised that white kitchen cabinets are back in style and had to ask the supplier if they even offered the color. I believe my wife has our entire home designed on her Pinterest pages. It would be helpful if the builder had choices available to her from their Pinterest pages.

Finally, homebuyers are using online reviews and recommendations to inform and validate their decision-making, beginning with the selection of the builder. Roofing, insulation, windows, doors, HVAC, water heaters, and most everything else that can lead to money and energy savings and is low maintenance. If I can buy a Rheem tankless water heater that provides more hot water, is energy efficient, and saves me money, I want to know about it. If certain products are not performing well, I want to know this too. I can find this information online in forums, blogs, and numerous other social media forums. Builders need to actively participate in this library of information, too, to help them stay informed of what their homebuyers are seeing and reading.

Now all of what I just described may be considered by some as unusual. Or is it? Will this become the norm in the next generation of home buying and building? Can you, as a builder, ignore this new trend? Are you ready for this new homebuyer?

By Social Marketing Team

Last week brought us the typical mid-month barrage of economic data and industry analysis. And while statistics are always open to interpretation, we’re feeling upbeat this Monday. Here are 5 economic indicators that could signal good times ahead for the industry.


Strong increase in residential permit sales – Claire Easley (BuilderOnline.com)

Very strong. Sales of multi-family permits are up 63% over 2010, their highest level in 3 years. Single-family permits, which make-up about 70% of the residential construction industry, also increased 6.6% over the last year.


Architecture Billings Index (ABI) moving in the right direction – Sarah Firshein (Curbed)

Technically, the ABI measures the demand for architecture and design services. In reality, it’s a leading indicator of what construction spending will look like 9-12 months from now. Although the October ABI continued the long decline it began back in 2010, the rate of contraction is slower and new project starts were up 3% over September.


Construction Fuel Consumption Up in October – ForConstructionPros.com

Probably the best indicator of current construction activity, the Wright Express Fuel Consumption Index reported that construction firms consumed – and thus burned – 0.9% more fuel in October 2011 than the year before.


Construction backlog stays above 8 months – Associated Builders & Contractors (ABC)

Only in the quirky world of economic forecasting do terms like “backlog” mean something positive. Here’s the deal: If the construction backlog indicator is over 8 months, then construction spending is likely to increase in the next year. If it’s under 8 months, then spending is likely to decrease.  The higher backlog rate was a major reason why ABC forecasts a 2.4% increase in construction spending next year.


Thanksgiving holiday travel set for record high – AAA Travel Views

In what some see as a sign of economic recovery – or at least consumer confidence – Americans are expected to travel more this Thanksgiving holiday season, increasing to a record 42.5 million travelers up from a 2008 low of just 37.8 million travelers.

By Building Experts Team

Doug Oles of Evergreen Custom Homes and Marty Creech of Creech Construction are owners of successful family-owned businesses in Greenville, South Carolina. Oles builds custom homes in the nationally acclaimed Cliffs Communities, which are spread throughout the Upstate of South Carolina and into western North Carolina. Creech focuses on major remodeling projects including kitchen, bath and whole-home remodels.

 Building and Remodeling In A “Healthy" Housing Market

Greenville’s housing market has remained relatively steady in the boom and bust that have been trademarks of the past ten years in real estate. The market was recently ranked #19 in Builder Magazine’s listing of the healthiest housing markets in the U.S. With modest 3-5% appreciation throughout the early part of the decade, home prices stayed relatively affordable and thus didn’t see a major decline the past couple years as witnessed in markets with double digit annual run-ups like Florida and California.

While prices have remained fairly stable in the market, both Creech and Oles have shared some of the same pains other builders and remodelers have faced throughout the country. Below is a summary of our recent discussion.

Build Intel: How has the recession impacted your business?

Doug Oles: Our production has slowed due to lack of demand and an increase of competition. We’ve had to trim our staff and try to make it through these tough times. We are fortunate enough to have projects through these times. We also had a little foresight and were able to prepare for this downturn. Unfortunately we really do not know how long this downturn will last, and I am sure that many companies in our industry will not make it.

Marty Creech: Dramatically, it has changed people’s priorities from large-scale projects to minor projects. I’ve gone from an average job of $250,000 to $100,000 the past two years. We’ve also had some challenges working with banks that may not be local and understand this housing market has remained stable. I recently had a homeowner wait nine weeks for financing. That’s never been an issue in the past. We’ve had more competition popping up too, from new homebuilders who have entered the remodeling market. I’ve gone from four to five competitors in my market space to 10 to 20.

BI: Have there been any silver linings for you and your business during the downturn?

DO: We have been able to “take stock” in our company and our process. We have had the time to streamline and increase efficiency in regards to process and sub-contract management. Also, with the downturn, pricing on materials and labor has come down giving our clients more value for less cost, making it an excellent time to build.

MC: Yes, we have remained somewhat busy, but I’ve also been able to spend more time with my family during the downturn.

BI: The stock market / analysts have followed the home building industry religiously since the recession began. How much do you follow the housing start numbers and the performance of the big builders?

DO: I do follow these numbers and reports fairly regularly. Because we are in a specific market at a specific price range, I do not put a lot of emphasis in these numbers. It’s good to speak to clients about these things, especially when the numbers are positive, but our clients typically know that they are going to build before they start speaking with us. We do follow some analysts and economic forecasts that pertain to us regionally. Also, I feel the local home sales numbers are a good indicator for new construction in my market.

MC: I really don’t follow these reports. It has little bearing on my market.

commod Building and Remodeling In A “Healthy" Housing MarketBI: Lumber prices are on the rise due to tight supply, have you seen an impact yet with your business?

DO: We have not seen a big impact as of yet, but we are preparing for this in our bids. Obviously an increase in lumber pricing is not going to help the building industry unless you can tell a client that they should build today, because tomorrow their house will cost more. In recent history this has just caused a decrease in builder profit.

MC: Due to the size of my company, I haven’t seen a major repercussion yet. It may have jumped 5%, but on my projects, a 5% jump on the cost of lumber isn’t a huge issue. During the gas crisis about five years ago, we adjusted prices then because everyone else was adding fuel and delivery surcharges, but so far this has had little impact.

BI: What is the general mindset of your buyer right now?

DO: Today’s buyer is looking for a great deal. They know the market is down and they expect to get an excellent price on their project. Today’s buyer is justifiably more discriminating and knowledgeable of costs. These are good things. We recommend being as knowledgeable as possible about a purchase and investment at this level. Today’s buyer must be cautious and make sure they do their homework on the builder as well. Because of the down market we have seen some interesting and possible dishonorable tactics from builders trying to get an edge.

MC: I’ve had many people think that right now in this market, everything is on sale and pricing should be very aggressive. While there is some truth to that, material has really held constant or gone up, so pricing reflects that as well. I have been able to leverage the downturn with some of my laborers because they are short on work.

dscf4255 300x200 Building and Remodeling In A “Healthy" Housing Market

BI: Are you starting to see signs of a turnaround in the market?

DO: Just within the past two weeks we have started to see a slight uptick in interest. We’ve seen some action in the local sales scene as well as a few more inquiries from potential clients. We have seen some negative news recently on the national new home sales front so we will see if that has an impact on this overall fragile market.

MC: I have a lot of estimates out there. The downtown area has remained strong for me. I’m still seeing customers doing a lot of homework, pulling multiple quotes from different remodelers and builders, but I do feel like this market is heading in the right direction.

BI: Anything else you’d like to add?

DO: It is a great time to build for people who have the financial ability right now. You should be able to get a good price on most projects. The market will come back. Sometimes it’s hard to stay positive, but we must remember that markets do cycle, and this industry has had, and will have, some great years. The companies that can make it through the bad times should be set up for positive gains when we get back to a better economy.


By Building Experts Team

The 2010 International Builders’ Show is behind us.  The most common theme we heard sounded a lot like tepid optimism.  Everyone is looking forward to what’s ahead, but with a cautious approach.  Many of the exhibitors presented an enjoyable atmosphere so that the attendees could feel relaxed and enjoy themselves.  This emotional connection created during hard times should be successful for these brands.

As we collect our thoughts and evaluate our strategies, here is some of the best coverage of IBS from around the Web (not including the large volume of Twitter updates).  We’ve also highlighted some of the sights and sounds that caught our attention.  If you read through this, you’ll find just about every product that was worth mentioning from the Show, as well as the top news stories that were released last week.

Comprehensive Coverage

Builder Magazine

Charles & Hudson

Bob Vila: On the Level

Popular Mechanics

Marvin Windows and Doors Blog

Consumer Reports Home & Garden Blog

WSJ Developments

ECOHOME

Home Construction & Improvement


 2010 International Builders' Show Coverage

Charles & Hudson

News

55,000 crowded the aisles

Homebuilders sticking with less-is-more approach

Homebuilding’s biggest CEOs to skip Show

More suffering in housing

Hard times show at builders’ expo

Remodeling activity forecast to pick up

Homebuilders hope to find financing


Photos

OTZmNmU*YmRkZDhhYjNjMyZvZj*w 2010 International Builders' Show Coverage


Video

Werner Ladder

LP SmartSide

Behr (Behr is an IMRE client)

Did we miss anything?

Honey They Shrunk the House

By Building Experts Team

The days of the showy McMansion are drawing to a close. In today’s tanking economy, homebuyers are being thrifty when it comes to the size of their dwellings. And lets be serious, choosing a smaller square footage means less to clean.

mcmansion 300x221 Honey They Shrunk the House

Cal Warlick editorial cartoon

Homebuyers are returning to the glory days when home sizes were modest and family rooms weren’t as “Great.” The latest statistics from the U.S. Census Bureau are proving just that – the median size of new homes dropped in the third quarter of 2008 to 2,090 square feet, from 2,291, which is roughly where home sizes were in 2000. To give any indication where we’ve come from, that median number was 1,400 square feet in 1970.

With this decrease in home sizes, there’s a good chance that more of a market will develop for many – those on a budget, the eco-minded and empty nesters looking to downsize their slice of the dream.

In this era where more homeowners are finding their thrifty and eco-conscious sides, they are also becoming more creative in what they are doing with spaces. Areas of the house that were once too small to do anything with are now becoming the nooks where the family computer lives or where the kids can eat breakfast in the morning.

Speaking specifically to green building, the NAHB Model Green Homebuilding Guidelines now awards points to small homes. The small mansions that builders have dreamed up in the last ten years have just gotten plain excessive. Now that homes are being recognized for energy output by a national set of standards, hopefully potential customers will take a look at exactly what they currently need or are planning for in a family.

Over the past year, top national homebuilders began addressing the topic of green features within their homes focusing mostly on indoor air quality, water conservation and energy conservation. But a good amount of those homes are in excess of 4,000 square feet.  Now can that really be considered green?

cape cod early 20th century house 150x150 Honey They Shrunk the House

Rafter Tales

So in the next few years, while the government continues to iron out the economy, expect to see a return to the times when Cape Cod homes ruled and people lived within their means – only now the men may be more likely to be vacuuming those floors.


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