Evolution or Revolution Coming for Builders, Experts Say
At a recent conference, housing experts identified several ways in which U.S. home builders need to innovate, or risk falling behind.
CEO of Whelan Advisory and former managing director of JPMorgan Margaret Whelan says that in the U.S., new homes take months, even years to deliver, whereas in Japan or Europe, homes can be delivered in days, adding that build speed is just one of several facets of home building that "desperately needs innovation," Entrepreneur Says reports.
Yet one of the most transformative factors in housing today is tech giants like Amazon, Alphabet, and Tesla disrupting the market, and see great financial benefit in doing so, experts say. At the same conference, Mark Boud, chief economist of Metrostudy, explained that his client base is shifting meaningfully, “It used to be that my clients were builders and land developers, period. Now, it’s about 70/30, 30 percent being these non-traditional players … that share is going to increase dramatically over time."
Their meddling in home building comes at an opportune time: the US housing market is facing a shortage of inventory — especially affordable houses — and is projected to remain under-built through at least 2022. The iShares Dow Jones US Home Construction exchange-traded fund (ITB), for example, has plunged 28 percent in 2018, and is on pace for its worst year since 2008. Shortages of land and labor, coupled with rising interest rates and affordability constraints, have slowed the housing market.