Could some of the most in-demand housing markets be cooling off?
E-Dreams for the New Millennium
While leading a discussion group during an industry executives' meeting just over two years ago, I overhead the president of a national homebuilder proclaim authoritatively: 'This Internet stuff is never going to materially affect our business.'
While leading a discussion group during an industry executives’ meeting just over two years ago, I overheard the president of a national homebuilder proclaim authoritatively: This Internet stuff is never going to materially affect our business "it’s just a place for perverts and voyeurs."
I sat in stunned silence waiting for someone to challenge his conclusion, or at least suggest that it takes one to know one. No one said a word. My, how things have changed. Our collective heads are spinning while the "Dot-com’s" of the world seem to be taking over everything and everybody. And now the e-world is coming to home building, quicker and with greater impact than even the most optimistic among us had predicted. In fact, in a recent Wall Street investment letter, one of the industry’s leading analysts confessed that his home building e-business predictions of just three months earlier were woefully underestimated.
As artificial as this new millennium thing is, it still seems like a good time to hazard some predictions as to what is going to happen during the next few years. I’ve been keeping my eyes and ears wide open on this subject, reading, talking and listening to leaders inside and outside of home building. Here is my list. Some will happen much faster than others, but I’ll go out on a limb and state that all will be commonplace by 2003.
- Scheduling suppliers and trades via the Internet will become routine for both initial building and service. Yes, every trade and every trailer will have a computer.
- The "tool of choice" for all field personnel will be a hand-held digital assistant that includes voice, paging and data in a single unit.
- Purchasing everything from lumber to plumbing fixtures to office supplies will be Internet-based and highly automated.
- A majority of customer-selected colors and options and virtually all of the related paperwork will be done via the Internet.
- Every builder having a website will be passé. Every house will be listed and virtual reality walk-throughs and community tours will become the standard.
- Traditional Real Estate Brokerages will change or die. The strong will survive in the pre-owned segment but new home builder utilization at the typical 2-3% participation commission will become a thing of the past.
- Payment to trades and suppliers will be done electronically. The old "advantage" of paying in 30 or even 15 days will be challenged by builders who pay the same day a job is complete to satisfaction. (Cost too much? Just watch their cycle times come down.)
- Although there will always be a place for classroom training, the primary delivery medium for training will be via the Internet.
- A "bundled" package of Internet, community intranet, local phone, long distance phone, digital cable TV and home security and maintenance monitoring through a single provider will become a standard feature in new homes.
- Current so-called "broadband" systems will seem as antiquated as today’s 28K modems. The bandwidth that will become available to new homes and businesses will make telecommuting a viable option for many, changing the look and nature of work forever.
- This bandwidth will make teleconferencing both cheap and routine.
- The mortgage approval process will become virtually instantaneous.
- The default option for beginning virtually all new employee job searches will be via the Internet. (Already, sites like monster.com are growing at exponential rates.) Now the downside. There will be damage done. Progress is never without its costs. We could spend another column on this and we will, but there are two issues to consider in the short run. One big danger is an e-commerce driven, low-bid fever for purchasing materials that completely disregards the essential labor component in most everything we do to build a home. There is always someone ready to fire-sale something that will work...but who is going to install and service it? I’ve already seen many examples of this phenomenon and it will get worse before it gets better.
Another huge danger, is that we will become "click-artists," under the illusion that we can buy, coordinate and manage everything with a few keystrokes or clicks of the mouse. It still remains today that the very best builders I work with base their business on relationships. The digital age can take a lot of the brain damage out of our current process, but it can never remove the need for people to talk to-and understand-each other. There it is. Tear this out, toss it in a drawer and three years hence we’ll see how I’ve done. Meanwhile, I’m quite interested in your reactions and especially in the predictions that you think I missed and the dangers you see. Send them to me (e-mail, of course) and perhaps we’ll have enough for a follow-up column.
Scott Sedam is president of TrueNorth Development, Inc., a firm specializing in organizational development, total quality leadership, process improvement and strategic planning. A former VP with Pulte Corp., Scott authored the company’s "Pulte Quality Leadership," process that pioneered TQM in the construction industry.
Scott’s column will appear monthly in PB. He can be reached by calling 248/348-6011 or by e-mail at [email protected].