Keep Your Eyes on the Prize: There’s Hope for the Home Industry-Part Two

Posted by Steve Kleber on Oct 10, 2007

As a follow-on to my last blog,  it’s important to highlight some additional reasons to further support the theory that those companies that ride out the wave of the housing slide will be the ones on top during the upturn. By creating and engaging in powerful and innovative sales and marketing strategies, those companies will emerge as stronger brands as the housing market rebounds. The Patriots just don’t stop playing football because they’re being called “cheaters” by the opposing fans. Today’s lesson – and you’ve heard this before – “What doesn’t kill you will make you stronger.” 

Consumer spending defies industry analysts

You can’t always rely on the analysts…more often than not, they are critics rather than realists. Is the glass half empty? Or half full? According to a recent article in the New York Times, consumer spending rose a better-than-forecasted 0.6 percent last month, the largest increase since April. Construction spending also increased 0.2 percent in August after a 0.5 percent decline in July. In addition, income increased 0.3 percent. Although the financial and consumer discretionary sectors are still a bit behind, the numbers are nevertheless showing a 0.6 percent growth, challenging earlier predictions. There is still plenty of demand in today’s economy.  

A rebound in sight?

Another Times’ article quotes Thornburg Mortgage claiming the market for “jumbo” home loans — those with a face value of more than $417,000 — appears to be improving. In recent weeks, investors have been more willing to buy bonds backed by pools of the mortgages, but are now demanding higher returns and increased safeguards against default. Although the market “has a ways to go before it’s back to functioning in a completely normal way,” said Larry Goldstone, president and chief operating officer at Thornburg, “home buyers searching for jumbo loans will notice a slight drop in interest rates.” He also comments that “the market has improved modestly and it is certainly not deteriorating.”  

Stocks – reaching record heights

The market averages are hitting new heights. Prior to writing my last blog at month’s end September, I couldn’t accurately predict what the new month would bring, yet this year’s October rebound mirrors that of October 1987…a spooky coincidence to the summer decline and retrenchment 20 years prior.  

How do you remain a heavy player? Maintain your stance in the industry. Even today’s largest and most profitable builders (KB Home, Lennar, Centex, D.R. Horton and Pulte Homes, among others) – that are all, by the way, reporting losses for the past two quarters – aren’t just halting new-construction because the housing marketing is showing a remission. Instead, they are capitalizing on opportunities to maintain and increase consumer demand such as paying for closing costs or offering additional features as incentives on newly-built homes.  

Moreover, due to tighter financing and lending options, these same builders are showcasing innovative ways to design and market homes that will shape new building and design trends and consumer buying habits for years to come. Instead of pouting over the recent lack of affordability of today’s McMansions, today’s most savvy builders are creating open and versatile home plans and building smaller homes on smaller lots that reflect the way today’s home buyers want to buy. Take a look at the new KB Home/Disney co-branding initiative for some blue sky inspiration.

Maintain an upbeat attitude

We’re coming off a high in the industry, a high that was, by all accounts, unsustainable. So, take the negatives and turn them into opportunities. Inspire your creative juices by implementing new sales and marketing strategies that will redefine the marketplace and your brand. Challenge yourself. Those companies that continue to specifically target today’s consumers with innovative and engaging sales and marketing strategies will be the ones that will remain on top in the long run. It may take a bit of refocusing, but if you keep your eyes on the prize you will emerge strong. 

This entry was posted by Steve Kleber on Wednesday, October 10th, 2007 at 4:10 pm and is filed under Advertising, Brand Management, Housing Market, Marketing, Public Relations. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.