Take Advantage of a Potential Bottom Forming in the Housing Slump

Posted by Steve Kleber on May 27, 2008



 Existing home sales posted a February increase of 2.9 percent—the first increase since July, as reported by the National Association of Realtors (NAR). The surprising boost challenged analyst forecasts of yet another decrease and helped reduce the swollen inventory of unsold homes currently plaguing the market. NAR said the inventory fell to 4.03 million units at the end of February, marking the lowest inventory since August. What’s more, on a regional level, NAR reported increases of 11.3 percent in the Northeast, 2.5 percent in the Midwest and 2.1 percent in the South, not withstanding a 1.1 decrease in the West.

Despite encouraging news of declining inventory and regions showing sales increases, analysts maintain that these numbers may only demonstrate further momentum that the housing market has yet to hit rock bottom. While some companies are disheartened upon hearing the austere forecasts others actually revel in the news. How so, you might ask?

With risk follows big reward
A recent article in Advertising Age has many forward-thinking companies cheering “bring on the recession!” Citing some of our history’s most challenging economic declines, these periods were punctuated by several important brands that formed as a result. Examples include CNN and MTV, which were launched in the 1980-82 recessions. Wal-Mart, who charged confidently into the nationwide market during the early 1990s recession, experienced its fastest-growing sales trajectory. Wikipedia was conceived in January 2001, immediately following the bust of the dot-com bubble. And October 2001, only 42 days after September 11, marked the unveiling of the first iPod. These brands and products — recognized as some of the most successful in history — found their growth potential during some of our country’s most uncertain times. In the case of CNN and MTV, each has reshaped media consumption habits and television programming for an entire generation. Wikipedia and the iPod have both transcended society into an open-source, portable media and music network.

The takeaway
Recessionary environments can be ideal times to pave the way for innovation in marketing. In stressful economic times, consumers are forced to be more selective and make tougher buying decisions. This environment amplifies the role of marketing in capturing the fickle attention of a nervous marketplace and redefines the way dollars are being spent. Sadly, many companies instead pull back in these times—laying off employees, reducing research and development, decreasing marketing budgets, and discounting their prices as a defensive sales tactic. Yet those companies who forge ahead and put it all on the line are the ones who will historically experience the biggest paybacks.

For those of us in the housing market, periods of down time allow for increased change and enhanced opportunities . The housing slump may well better position the way for improved advancements among residential products and brands, pioneering floor plans, unique and affordable housing options, as well as technology innovations that push the envelope. Draw a lesson from our country’s past. “For marketers who kept their wits, economic valleys–the deeper the better, in fact–became foundations of empires.”

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This entry was posted by Steve Kleber on Tuesday, May 27th, 2008 at 10:49 am and is filed under Advertising, Home Building & Design, Housing Market, Marketing. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.