It's fourth-quarter in America ... a time for action
The aftermath of Hurricane Sandy is the story-within-the-story on this moment in housing's recovery, and in some ways, focus on the temporary impacts and consequences of the storm and its damage may shed light on both opportunity and challenge for those whose livelihoods and well-being draw from the business of housing writ large.
In this morning's Wall Street Journal, a Developments post from Robbie Whelan captures perspective from Toll Brothers' chief financial officer Martin Connor, who asserts Sandy's effects may impact fourth-quarter final closings counts, since the storm swept in as Tolls' Q4 deadline approached on Oct. 31. That's just timing, however, and the lion's share of Tolls' buyers will move to the settlement table and get counted as Q1 deals vs. Q4 2012 ones.
Here's Connor's key take-away:
“Half our business is between northern Virginia and Boston, and that kind of overlaps with where the shadows of Sandy are showing up,” Mr. Connor said. “This type of weather event has limited impact on the market. It may move settlements later, and may defer people a weekend or two until they go out shopping. But it doesn’t have a long-term impact.”
Meanwhile, ISI Homebuilding Research's Stephen East has done a little more homework than Whelan on the Sandy impact issue, and East's insights highlight not just the exposure and inconvenience among home builders, but the opportunities and challenges for the broader housing business community.
Here's Steve's chart of public home builder exposure--operational, financial, and communications-wise--to the consequences of the storm and its daisy-chain of consequences:
Immediately, solutions for builders, remodelers, architects, and the supply chain experts trace to three areas: geography, finance, and materials logistics. About two weeks ago, the world celebrated as Alvin Roth and Lloyd Shapley won the Nobel prize for their work on matching pairs of interests from among large pools of options. Now, there is great opportunity for housing players, providing they can match solutions--flooring, drywall, paint, lumber and shingles, financing, and labor--to the crying need up and down the Mid-Atlantic to New England.
So, here's our thought, and it's a call to action across several of the industry silos, which if they'll match need to solvers, can benefit this important region's resilient come-back from disaster. The key assumption here is that time and delays--in communications, approvals, operational effectiveness, and problem resolution--are the enemy of value. The more time and delays that occur, the more value is destroyed, which in turn suppresses healthful economic activity.
- Supply-chain solutions: why not create an ad-hoc post-Sandy solutions community around getting needed building materials to scattered sites and key distribution points up and down the Northeast Coast? What if the smartest people in the supply chain and logistics business teamed up on geo-locating optimal distribution points for the most-needed materials, set up communications work-arounds, and got dealers and distributors networked to deploy all materials on an on-demand basis to work sites? Shingles, flooring, lumber, dry-wall, paint .... who's going to come up with the smartest way to cut through the hidebound distribution system that would set up powerful inhibitors to getting matters resolved? There have to be some good new ideas, processes, and platforms to get materials into challenged sites, and get them "matched" to their point of need.
- Finance: the President has ordered the Department of Housing and Urban Development to issue a moratorium on foreclosures among Federal Housing Administration borrowers in the affected regions. Too, Fannie Mac and Freddie Mac have jumped into action to assist borrowers whose homes have been damaged, either via forebearance programs with mortgage servicers or new funds. But what about getting credit, investment, and debt truly matched in an innovative way that could cut through red-tape delays and denials, and represent a yield opportunity otherwise hard to find among those who can put their hands on a lot of capital in today's low-interest environment?
- Geography: The notion that real estate is local--so local that its entire reality hinges on a plot of earth with four boundaries--is helpful with respect to technical, artisanal solutions that need to kick into play to repair, replace, and restore value in the wake of storm damage. Still, communication, operations, transferable skills, and an effective supply chain can go far to offsetting some of the restraints of localism when it comes to helping haul people back to their feet after disaster strikes.
I guess the question is--as we get more and more sophisticated about the intimate and powerful ties between bits and atoms--can we call now the moment when the very notion of resilience can be crowdsourced, thrown into an open-sourcing innovation mode, and kindled by brilliance, compassion, and smart peoples' spare time?
I don't doubt it. One of the past Super Bowl's memorable moments was this TV spot.
Well, now we're past half-time. It's the fourth quarter. No more wondering what to do to win. It's time to act.