Recently, I listened to an IMN Webinar about homebuilding strategy insights. The purpose of the webinar was to share ideas and solutions for preserving equity and ways to position your company to emerge from the quarantine successfully. In this article, you’ll learn more about how home builders and developers can rebound from COVID-19.
Although it is hard to maintain your current business flow under quarantine, there are some strategies you can do to keep your business afloat:
Brad Hunter, the Managing Director of RCLCO Real Estate Advisors, shared during the webinar that recovery depends on how long the health crisis lasts. During this shutdown, we could potentially see a deep cycle or set of cycles if this virus persists. It is difficult to determine the timing of recovery at this time, but COVID-19 is not expected to have a V-shaped recovery.
This means recovering can vary depending on how well people social distance from each other and follow these new rules and regulations. The more we can flatten the curve, the closer we are to recovery.
COVID-19 is limiting the ability for homebuyers to travel freely. Therefore, it’s putting a damper on many home builders and developers who rely on out-of-state homebuyers. Homebuyers have much pent up demand too. For example, COVID-19 has changed the lifestyle of many Americans, turning their homebuying purchase into a delayed one.
People are not only working from home but are also monitoring their young children, caring for the elderly and navigating this new short-term normal. In essence, people have bigger fish to fry than trying to buy a home. Your homebuying market may not seem too active right now, but remember they are still interested in buying your product when this is all behind us. It’s best to be fully prepared now to take advantage.
Gene Myers, the CEO of Thrive Home Builders, a small builder in Denver, shared that his buyers’ behavior is sticky. Meaning that not all of them are canceling their appointments. He believes construction will be the cornerstone that will rebuild the economy and reshape the future. Gene continued to share that although he had low website traffic at first, it is increasing and giving him and his team hope.
Below is a list of home builder and developer rebound strategies Myers recommends:
Yes, your services are considered essential and construction can be done safely.
According to Hunter, there are regional differences across the country. For example, Orlando is taking a double hit with tourism and hospitality. While the hospitality focused states are taking a hit, the South Eastern states are doing fairly well.
As for more resource based industries, there are low oil prices that have ripple effects. In fact, he believes 50% of this slowdown we are seeing is from COVID-19, 25% is from oil and the remaining 25% is from other reasons such as consumer spending, decision making, etc.
Land right now is scarce and/or frozen. COVID-19 has prevented land committees from meeting and are making many builders feel stationary in terms of capital and land acquisition. However, don’t get too discouraged because developers are still developing in ongoing phases and are continuing projects.
As I mentioned earlier, homebuyers have pent up demand. There are actually two kinds of demand coming from consumers: traditional/figurative and literal demand. People want to go back out and spend money but at the same time, they need their jobs back and rehire for consumer spending to get back to normal.
Richard Gollis, the Cofounder of The Concord Group, shares the focus has been on the asset level, information overload and planning ahead. Granular data on residents and shoppers are what we need to research to learn more about asset risks. Even though we are experiencing information overload, we need to move it down to the individual project level.
Gollis continues to share that you need to look at your assets and cash before determining how to move forward, hold or walk away from an individual project. For entitled projects, you should continue working on those and try to get extensions and budget deals. Companies who have a plan are the strongest in this unprecedented downturn.
There is no question COVID-19 has changed the way we operate within and outside of our homes. The speakers in the webinar predict this new normal will increase the demand for more in-home gyms and office spaces. Floor plans might shift to become more compartmentalized and suburb living is looking more appealing than multi-family.
Besides the elderly and the immune compromised, millennials are also taking a hit from COVID-19. This is because many are losing their jobs, moving back in with mom and dad and having children later on in life. Many would agree that raising a family in a single-family home is easier than raising a family in an apartment or condo.
Overall, COVID-19 is making history and is altering the way, not only home builders and developers manage their business, but the way people manage their personal lives. For more information about how home builders and developers are handling COVID-19, check out these resources:
About Terry Zelen
Creative Director | Consultant | Author | President of Zelen Communications
Terry Zelen is a seasoned Creative Director with more than 35 years of experience in Home Builder advertising and marketing.
He is the founder of The Punch List, which is an online blog to help inform home builders and developers on strategic marketing insights to fuel their firm.
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