There is this scene–final scene–characteristic of films of a certain genre: the survivors–often as heroes, but always as survivors–emerge from the desolation and destruction to face the light of what remains of their world and figure out how to go forward.
And, perhaps as an industry, home building is now there.
That’s one way to characterize the substance and tone of the exchange I had this week with Bill McBride, who publishes the Calculated Risk weblog and John McManus, who is the Editorial Director for the Residential Construction Group of Hanley Wood.
I had asked McBride whether his opinion in Calculated Risk that NAR-estimated existing homes sales were now in a normal annual range of 4.5 million to 5.0 million also meant that the annual rate of Census Bureau-estimated new single-family home sales should sooner-than-later settle broadly in the range of 700,000 to 900,000.
Bill replied, yes, that should be the case, provided the “distressing gap” between existing and new home sales, currently at about 12:1, became a less-distressing 5:1 or 6:1. He said the midpoint of my range (800,0000) was about right.
McBride is confident in what he sees. I am not confident in everything I see. McManus says he thinks that all the demand models are broken and nobody really knows what’s next. John and I would probably agree that Bill is a lot smarter and knows a lot more than either of us. All three of us would likely agree that, all things considered, there are worse prospects than a run-rate of 800,000 units per year.
If new home sales more than double from current levels over the next few years, as McBride predicts they will, then, in my view, it matters very much what steps a home building enterprise takes as it emerges from the abyss, and how it deals with current reality and whatever the future holds for it.
The answers it formulates to these four questions matter: What has to change? How do you create sustainable competitive separation? How do you move beyond operations and performance that was previously considered acceptable? How do you escape from averageness?
That last question was the focus of Escape from Averageness®, when I began writing the weblog in January 2009, at a point where we had already been in the Great Housing Recession for more than two years. And, it was at that point almost six years ago, in early 2007, that I had written The Saga of RB Builders©, to help explain a new consulting approach, one in which SAI Consulting would offer a high-yield, value-driven, results-based alternative to conventional consulting.
The Saga of RB Builders© traced the story of a home building company, as it went through a five-year effort to improve operating performance and business outcomes in a changing and challenging housing market. RB Builders and its characters were fictional, but the context in which they existed was quite real. The story became a prequel to The Pipeline: A Picture of Homebuilding Production©.
Written, as it were, in 2007 and looking back from a point at the end of 2012, The Saga of RB Builders©, in effect, looks back to the future, and reads like historical fiction. In 2007, The Saga of RB Builders© could not do justice to the length and depth of the recession, the immense carnage to come, the extraordinary damage to margins and volumes, to balance sheets and careers, that would ensue.
Yet–yet–if I were asked, as the author, what aspect with which I am most satisfied, it would be that the story seems unaffected by the passage of period of time--and, thus, The Saga of RB Builders© remains extraordinarily relevant.
It is a path out, from the abyss.
- Part I The Tar Pits of Averageness (March 2016)
- Part II Mutual Assurances (April 2016)
- Part III A New and Difficult Course (May 2016
- Part IV A Stake in the Outcome (June 2016
- Part V Setting Out: 2008-2009 (July 2016)
- Part VI 2010: Farewell to a Trusted Advisor (August 2016)
- Part VII Pre-2012: A Changing Market (September 2016)
- Part VIII More-for-Less (October 2016)
- Part IX 2012: Beyond Current Possibility (November 2016)
* (The Saga of RB Builders©, written by Fletcher Groves III in 2007, is being republished this year as a nine-part in Big Builder)