The residential housing market is healthy, but there will be obstacles during 2019. Prices for new homes may be slowing but there still will be a great opportunity for home builders with the right strategy for the upcoming year based on what builders have learned from 2018.
Residential home builders and developers learned many great lessons in 2018. News headlines suggest that new home prices are declining but the market will still be competitive going into 2019. Coupled with advances in technology, the labor shortage affecting all blue-collar industries, and new emerging trends in home building – builders have many topics to consider for the coming year. Read the top 4 topics builders will face in 2019 and what builders need to know about them to prepare.
A Strong Building Process Will Be Paramount
In a thriving market, home builders may feel safe that their products are a sure sell, but as prices begin to cool and competition rises – you can bet your market competition is coming up with new ways to bring on new homeowners. Whether it is perfectly aligned construction schedules to maximize building efficiency or a customer experience that will have homeowners referring you to their friends and family, expect technology to become part of the solution. With a tight process, expect homebuilders to become more scientific with the way they do business, reports will become their best tool under their belts. For example, for your sales team – tracking monthly new home sales and upgrade sales by each sales representative could make for a competitive company culture. In regards to bidding and purchasing, perhaps establishing a report on costs for resource versus the cost of production could allow you to make better decisions when selecting vendors for your homes’ materials. In accounting, a high-level dashboard report for projected revenue could also become a critical tool for executives to understand the overall company performance. Assigning metrics to each building functions role will become paramount as home building processes take a methodical transformation, with home production optimization comes growth for the builder.
For the complete guide on selecting and growing your building firm through integrated management software, read the complete “Homebuilder E-Guide: Selecting Management Software”.
Labor Shortages – Getting Creative During Construction
Construction and scheduling trades are critical phases in a home builders’ job. It is what brings homes to market for homeowners. The current state of affair for builders is finding the right trades who are committed and fair in terms of their compensation. Due to the lack of interest from millennials in the trades and their higher educational qualifications in comparison to their parents (baby boomers), expect the labor shortage to last a while unless the societal outlook changes on blue collar labor. Expect pre-fabricated housing to emerge as a staple supply chain asset for homebuilders. Manufacturing companies have already come into market and operate as factory line warehouses that manufacture the different parts of homes. The home frame, roof, panels, and decks will all become manufactured offsite and shipped to the lot for assembly. The role of operations managers and superintendents will become more paramount as their role becomes more logistics based than technical in terms of managing home builds.
Interior Customization and Home Upgrades
Interior décor and amenities for new home buyers have become the new expectations from building firms. Home buyers desire the experience of going to a home builders sales office and choosing the different finishes to customize their home interior. Managing these décor appointments also is proving to have taken an interesting turn for 2019. We are seeing many new technologies appearing in design studios, virtual reality has been a tool to showcase alternate finishes to homeowners, we are seeing tablets and mobiles used for quick spec lookups on products. Even the main process has become automated, the focus is now on homeowners and their wishes. As interior décor catalogues become digitized, digital product libraries are helping builders serve contracts to homeowners quicker than ever.
For the complete guide on design studio trends developing in the residential homebuilding industry, read “Top 2019 Design Studio Trends for Homebuilders”.
Navigating a Lucrative Market in 2019
Although the headlines regarding real estate costs are telling us there will be a slowdown in the housing market, the market itself is steady and great for business. There are few factors at play here, Americans are generally feeling good with their job security, the employment to builder permit ratio is above average across the country, and millennials are also entering the homebuyer market and surprisingly choosing to move farther out from the main city’s and selecting smaller entry-level homes in comparison to their parents, the baby boomers. The vacancies in trade jobs have allowed trades professionals to capitalize on the job crater. This intern is driving up costs for builders and ultimately home buyers. Although prices and new homes sales are decelerating don’t expect the market to collapse! During a market like this one, it is time to consider all facets of the business of home building. Customer experience is no longer optional but an edge that will determine which builders gain control of the various markets. Process becomes crucial and the technology driving it as time becomes of the essence during construction, the lack of skilled labor will also pose a choice for builders as their trade base evolves to include wholesale building material manufacturers. One thing can definitively be said, this market will require creativity and commitment to all facets of home building.
For 2019 residential market statistics and opinions from building executives – watch the webinar on “2019 Industry Predictions and Building Trends”.
The Verdict
The market is healthy for homebuilders but there will be challenges along the way. Regardless of the challenge, whether it is dialling in a steady construction process, optimizing building strategies to bypass the lack of available trades, or optimizing your customer experience and product selection to cater to the wishes of homeowners. Builders will need to get creative in the business, embrace innovation and technology, and keep homeowners at the forefront of everything they do.