Since its introduction a year ago, the NAHB/First American Improving Markets Index (IMI), which tracks housing markets on the mend, has become a highly regarded housing benchmark.
More important, conditions in the housing market continue to validate the underlying premise behind the IMI: Individual housing markets are showing ongoing, measurable progress on the long road back to normal.
Another benchmark, the NAHB/Wells Fargo Housing Market Index, which measures home builder sentiment about the market, recently reached the highest level in five years. And other major indicators, including new-home starts, sales, and permits are trending upward as well.
There is little doubt that the housing market is at last recovering from the Great Recession.
That said, it’s important to note that this upturn is modest at best and that the road to full recovery will be long. And don’t expect the recovery to be an uninterrupted upward path. At times, national indicators may stall or fall back before continuing to improve. Likewise, not all communities will share equally in the recovery. We’ve said it before, and it bears repeating: Every market is different.
I’m often asked what advice I would give to the builders who have made the long journey through the worst conditions since the Great Depression and now are preparing to get back to work.
Generally, I would advise every builder to exercise common sense and follow good basic business practices. Don’t just jump back into the market with the expectation that things will be the same as in the past. They won’t.
Instead, step back and assess every aspect of the market carefully and objectively, and be sure to look closely at prospective home buyers. They won’t be the same as in the past either.
Now is also the time to reconnect with subs and suppliers or to establish new relationships if necessary. A signed contract in-hand means very little if reliable infrastructure isn’t in place to get the house built and delivered.
I also would advise NAHB members to “use your dues” and take full advantage of the many excellent products that the NAHB provides exclusively to members.
Just a short list of products that could be useful in positioning a company to re-enter the market includes:
• Regularly scheduled and on-demand webinars on a broad range of subjects— www.NAHB.org/webinars
• Online business management resources covering topics from accounting to strategic planning— www.NAHB.org/BizTools
• Online toolkits focusing on the rebounding housing market— www.NAHB.org/SuccessToolkits
• NAHB classes presented by local and state HBAs
And, of course, don’t forget the NAHB’s International Builders’ Show (IBS), which is truly the crown jewel of the NAHB’s offerings. With cutting-edge education programs, acres of product exhibits, and numerous networking opportunities, the IBS is a great resource for anyone, and NAHB members receive a generous registration discount.
Finally, even though it has been a long wait, and builders are eager to get back to work, I would repeat advice that the NAHB has been giving members for decades: Avoid getting overextended.
I know that’s easier said than done, but in this new market with its new rules, conservative and caution should be watchwords, not four-letter words.