Analysts and experts offer two kinds of helpful commentary about my business.
One looks at common practices and their varied outcomes, and suggests ways that improving those practices can lead to more favorable outcomes.
The other type of insightful observation involves taking a big step away from all those practices and outcomes, and from that remove, comments on the validity and viability of the business model itself.
Take, for instance, the experience of a long-time print-focused journalist. Which is going to be the more helpful commentary? Advice on how to craft a stronger inverted pyramid lead sentence and second paragraph? Or, rather, maybe it’s time to start improving your digital media—web, video, social, etc.—chops, dude.
Counsel of each type would be helpful, but you and I know which would mean more to my career aspirations right now.
So, that’s why here, we toggle back and forth between attempts to take note of how the rules of the game are changing, and an effort to relate the sense that the game itself is also in question.
If we take that big step back and look from that remove, we sense that all the attention to age demographics right now—i.e. Will Millennials buy houses?—is a focus on the former type of insight, about the rules of the game changing.
The game itself changes—as it has in the world of media and journalism, where media consumption and the disrupted role of advertising as a primary life-stream for journalism-based businesses are a reality that separates “legacy” companies from going concerns in digital content and data services—when we look at households.
As others point out, economics itself derives from a Greek term—oikonomía—meaning, roughly, management of the household. What others also observe is a tie between psychology and behavior that causes people to change their households in a correlative way related to financial and economic well-being.
What we’re seeing—and what we may hope will be helpful for you to know and respond to as well, although it’s a significant challenge—is an accelerated change in how households, the engine of our economy, come together and behave once they form.
Here’s a chart that shows a profound change in the last six decades, from World World II, when nine out of 10 households were “family” households, and 43% or so, were married-with-children households. Now, as of the last big decennial Census, “family” households declined to 66.4%, and married-with-children households had decreased as a share by one-half, to one-in-five households.
Now, we know, that skill and talent in designing, building, and marketing to that one-in-five share of the market will mark the difference between who’ll be around through the next housing cycle and who won't.
What we don’t know, and what we’re just getting glimpses of is how the fundamental transformation in households—where four out of five of them do not consist of a married couple with a child or children below the ages of 18—will change the game.
This morning’s analysis on BUILDER from one of our respected sages of home building and development, Stockbridge LLC.'s George Casey, suggests that those of you who are counting on sustainable viability of pure-play single-family for-sale housing may need to look again hard at data that show a shrinking pie.
The tough choice being, do you work to get a bigger slice of that, or do you figure out a recipe for some new dessert course altogether.
We’ll be here, trying to help you with insight into both of those alternatives.