Economic recovery. Stabilization. Positive indicators. Rebound. Turning point. The bottom. It would have been hard to imagine just a few short months ago, but these are the words that have taken over recent headlines. And the stories themselves? Job loss numbers, the last remaining metric to sound a positive note, were the smallest they’ve been since August of 2008, and unemployment actually dropped a tick from June. Stocks are up nearly 50 percent since a low in March, and Standard & Poor’s index hovers steadily above 1,000. Warren Buffett’s Berkshire Hathaway is back in the black. Even Freddie Mac turned a profit. News directly related to the housing market is encouraging, too. Sales of new homes are rising, and inventory is decreasing. Sales data for existing homes revealed the biggest monthly increase in more than a decade. Starts are up, and traffic is too. Prices are still low but so are interest rates. And according to outplacement firm Challenger, Gray & Christmas, American job seekers are once again relocating for employment. In the second quarter of 2009, more than 18 percent of those finding new jobs moved to take their new positions. Such moves could presage a significant resurgence in home sales in some regions.
No one’s ready to say the recession’s over, not by a long shot. And there undoubtedly are more hard times to come. But it’s nice to have some good news after such a long spell of bad. Sadly, the snippets of good news we’re hearing now have come too late for many in our industry. The usual wisdom holds that builders are an optimistic lot, more than most people and often against all odds. The last few years have hammered the industry so hard, though, that many builders have, understandably, lost their customary positive attitude.
But not all of them. Take Trumark Homes, for example. A newly launched home building operation based in Danville, Calif., it’s one of the featured companies in our cover story this month on home building startups that have begun sprouting up all over the country (see “Setting Out”). Trumark recently closed on 11 acres in Orange County, Calif., where it plans to build 68 to 72 detached homes starting next year.
This is pretty interesting news, if, like me, you thought it might be a while before the O.C. looked like a good place to start a new project. But the company, a home building arm of a larger residential and commercial development firm, may be in just the right place at the right time. The Southern California Multiple Listing Service reported that revenue from homes sold in Orange County in July totaled $1.4 billion, more than in any month since July 2007. But Trumark’s business plan was written long before this upward trend; it carefully mapped out a strategy to target “infill opportunities in constrained markets.” The timing may be just a bonus.
With demand so low, new home building companies cannot adopt a business as usual attitude. Times have changed, and so have buyers. And, indeed, the other startups we found are seeking to carve out niches for themselves, with business models that offer homes customers can buy now, in these straitened times, but may also provide significant opportunities for growth.
West Palm Beach, Fla.’s Len Tylka may have found such a niche for his new company, HardShell Homes. Tylka and his partners plan to build small, factory-built, wind-resistant homes to NAHB green standards, for workforce buyers. Small, green, wind-resistant, and affordable? It would be hard to lose, even now, with that combination. Add to that equation the prospect of creating an exciting new product for Florida’s manufactured home customers. Sounds like a great idea with a lot of potential.
What’s your great idea? You don’t have to start a new company in order to embrace new concepts, new solutions, or new goals. But you do have to look objectively at your business to see what changes you need to make if you want to ensure its relevance in this market and in the future.
Learn more about markets featured in this article: Los Angeles, CA.