On the long road back toward sales levels rivaling the best years in the industry, are similar profit levels still available? Where will we find profit?
Month by month, the housing economy improves, despite the continual pundit-sourced predictions of illusory gains and dead-cat bounces. As gross sales rise, however, one of the greatest fears is that builders will go back to the old-used-to-be practices where volume can cover a multitude of sins. During the go-go years of 1991 to 2006, almost everyone made money building homes, yet the greatest returns accrued from the land play. The amount of money left on the table boggled the mind. This begs a critical question: On the long road back toward sales levels rivaling the best years in the industry, are similar profit levels still available? We now face increasing shortages in both labor and materials with land and lots scarce nearly everywhere, a result of the near-shutdown of the development industry during the recession. Where will we find profit?