Wednesday, June 8, 2011

TIME TO GET HONEST ABOUT HOUSING STARTS

2011 was supposed to be the year when home builders and modular home factories started seeing their orders for new homes pick up.  We all heard that you can't keep the public's interest in buying a new home pent up much longer but that's being taken away by outside forces.

Taking a harder look at what is hurting new home sales finds that even people that can afford to buy a newly built home aren't doing it.  So what is holding them back?  Here are just some of the reasons that might be causing buyers to hold off buying new construction.

Stagnant wages.  We all see the numbers.  Unemployment rates hovering around 9%-10%.  Monthly new hires by employers adding only 50,000 people last month, and those are mostly retail and service industry jobs.  Many professional people are still either losing their jobs or have been told there is no raise or additional benefits this year.  I read where the average income of the newly hired worker last month was $13.84 an hour.  How can people earning that buy a house?

Foreclosed and distressed homes.  This is an easy one to see.  Just drive in any neighborhood in your town and look at the number of homes with the white stickers in the windows with no For Sale signs in the front yard.  These are bank owned homes that haven't been put on the market yet, just waiting their turn to dance for the Realtors.  My wife and I take evening rides a couple of times a week and drive through towns and see homes with the grass and weeds growing uncut for months.  Driveways that have no cars.  Where have all these people gone?  And why can't the banks sell them?

Higher consumer costs.  Just two short years ago, Peg and I did our weekly grocery shopping for about $65.  Last week, the groceries totaled $83 for the same stuff.  And we are empty nesters!  I can't imagine how a family of 4 can keep their food costs down.  Gas prices are still hovering around $4 a gallon.  This puts a strain on modular home factories that must add large surcharges to their homes which is passed onto the home buyer.

Under water mortgages.  Even if you do qualify for a mortgage using the ever tightening requirements by lenders, if your current home is under water, meaning you owe more on your present mortgage than it's worth, how can you afford it?  I listened to the Fed saying that there are programs available to help people in danger of losing their home to foreclosure but the ugly truth is that many of those people should not have been given mortgages in the first place and they are the ones flooding the system with requests that are being turned down. 
My next door neighbor built their retirement home only 5 years ago when they were both making good incomes in real estate.  Then 2007 hit and their income fell dramatically.  They have tried for the last 2 years to get their mortgage readjusted through the Fed programs but every time they thought they had everything worked out, they were told they needed more information by the lender.  They moved out last month, abandoning their dream home.  They can afford to buy another smaller, less expensive home, but that won't happen because they lost their present home.

Attention Modular Home Factory Owners!  It's time to get honest about housing starts.  It isn't going to be good this year, maybe not next year, maybe never again.  This is your new reality!   You have the power to make this new reality work for you.  Start by kicking everything you thought you knew about marketing and selling new homes out the front door.


Bring in new ideas from your builder networks, listen to your sales reps, hire good marketing people with proven track records, increase your web and social media campaigns, redesign your homes for the new economy and get rid of all the dead wood that has been cluttering your factory for years.  Stop hiring new inexperienced sales reps because they will work for peanuts and look again at the older, more experienced reps that were left go because they cost you too much.  Their knowledge is what is needed today.

This is not the time to sit at your desk and wonder what to do, it's the right time to do something to make this new reality work for you.

2 comments:

Anonymous said...

Also being empty nesters I wish my wife and I could get out of the grocery store with what you stated you pay. It would be just devine.

Coach said...

We are very careful what we buy at the grocery store. It helps that I am on a strict diet. I've lost 30 lbs since Feb 5th and still have 20 more to go.

Now if I can only find something to snack on besides no-fat popcorn, my life would be great.