Publisher's Letter: Lift in the market

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But at a time when the market is barely off the mat, does it seem cockamamie to consider the ill effects of growing too fast? If this really is the beginning of a new, more sustained boost in the market for new homes, then now is likely a good time to consider how we want our companies to operate and interact with customers for the long climb back.

June 04, 2012

It is a measure of just how chastened builders remain from the ongoing housing recession that when they feel a lift in the market — like many are experiencing now — they tend not to believe it. To my way of thinking, this is a healthy response to what is a healthier market.

But at a time when the market is barely off the mat, does it seem cockamamie to consider the ill effects of growing too fast? If this really is the beginning of a new, more sustained boost in the market for new homes, then now is likely a good time to consider how we want our companies to operate and interact with customers for the long climb back.

Our view is that chasing all available home-buying dollars is a very good thing as long as the result is a string of satisfied customers — raving fans that will generate referrals for you this fall, next spring, and beyond. Conversely, a trail of neutral or negative customers will surely hurt your long-term earning potential. Word-of-mouth today travels faster than ever. So you have to strike the right balance between perhaps bucking up and making a hire now — a superintendent or a designer — in order to get the job done right or waiting to hire and potentially sending a harried staffer out to deal with your prospects and customers, that future referral stream.

Against the wall in my office is a bookcase containing the bound copies of Professional Builder going back more than 75 years. Open any issue throughout that period and you will find stories about builders as entrepreneurs — people who successfully identified a market need and then quickly matched the right product on the right dirt to meet that need. All indications are that the market just coming off the mat will be far more complex than the one we experienced from 1995 to 2007. It will look more like the slow growth years of 1963 and 1982, with a greater mix of products sold. Therefore, the ability to pivot to different product types in very different locations to meet very local market needs will require a degree of nimbleness the industry has not seen in awhile. And therein lies the challenge and the opportunity.

When you look around at your team today, you most certainly see a room full of top players, survivors, and multi-taskers — all very capable of handling themselves well with customers. This must be the group of people who will help you re-establish your brand and your company in a way that reflects who you are and who you want to be going forward. We are not out of this thing by a longshot. It is right to be extremely cautious of the lift we are experiencing right now. It makes sense to chase down every available dollar. But there is a chance that this growth is sustainable and you never want to lose sight of the lifetime value of a happy customer. After a series of fits and starts this is likely a lift you can believe in.

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