Half of the home builders in a recent Big Builder Online survey said they think 2011 will be about the same as last year.
However, 37.5% said they think the year ahead will be a little better than 2010. One respondent attributed his optimism for 2011 to "pent-up demand and less quantity of available for-sale used homes." Only 12.5% of respondents think 2011 will be worse.
Response wasn't as positive on the profitability front, with 43.8% of respondents saying few builders--both public and private--will be profitable in 2011. The rest of the response was mixed: 18.8% predicted profitability for most builders in the new year, 18.8% said mostly public builders will be profitable, and 18.8% said mostly private builders will be profitable.
One respondent noted builders will be "profitable, but barely. Those operators who are still in the game should have learned their lessons by now. Leaner operations, better investment strategies, better aligned product. Legacy communities will continue to be a burden; those who were able to reset these last year should be able to operate within them in 2011. I think we will still see land impairments/resets, specifically for land tied up in early 2010."
In terms of improvements in the industry, the majority of respondents--87.5%--said most home builders have done a sufficient job reducing overhead, while 56.3% credited home builders with reducing operational efficiencies. Also of note, half of the respondents said builders have done a sufficient job getting better labor prices and negotiating better material prices, and 18.8% said they are doing a good job developing new product to meet today's buyers' needs. Ranking lowest on the list, only 6.3% of respondents said builders are doing a sufficient job securing new capital.
Foreclosures and finding qualified buyers are the biggest challenges ahead for builders, according to the respondents. These challenges are followed by consumer confidence and unemployment rates.