Certainty is a firm conviction something is the case. To speak to certainty’s qualities, we use terms like sureness, confidence, and the absence of doubt. For housing and its disproportionately important subsystem of home builders—especially since the Great Recession—not much is, or has been, or ever will be a sure thing, nor do its more experienced denizens put a heck of a lot of stock in expectations that things will go reliably one way or another.

In other words, home builders—and the ecosystem of land sellers and developers, investors, lenders, trade partners, manufacturing and materials suppliers, real estate agents, and others connected to home builders—live with the opposite of certainty very nearly always.

A thousand-and-one reasons may favor a new-home sale and settlement at any instant, but only a single reason needs to be enough to clinch the deal. Too, while a thousand-and-one forces may conspire against a completion and closing of that very same deal, one show-stopper is all it takes to derail it. Fact is, real estate may be one of the few “sure bets” people constantly lose money on, largely because of two wildly mercurial stars that must align to win: timing and location. Still, shrewd judgment on the right deal in the right place at the right moment merely reflects outwardly an inner system of three essential skillsets home builders must do exceedingly well—in addition to actually building houses.

  • Buying: Builders buy real estate, labor, building materials and products, and myriad services that complement their management of construction projects and programs.
  • Selling: Builders sell homes, neighborhoods, the value of customer experience, the dream of homeownership, and the preference of new homeownership to consumers. Builders also sell their track-record of reliability to lenders, their reputations to developers, and their credibility to municipal officials essential to green-lighting new local development.
  • Finance: Builders work with capital flow in and out--whether it’s other people’s money or their own--to finance projects, operational costs, new land, mergers and acquisitions. At the end of the day, income needs to exceed outgo for a going concern to thrive tomorrow and the day after that.

All in, when builders do what they do best, they excel at mitigating cost risk and expanding revenue opportunity in the present, and sustaining profit-making use of capital for the future. Now, to try for a 40,000-foot view of what’s going to work differently for housing in an era—post the January 20, 2017 inauguration of America’s 45th President Donald Trump—where current Federal policy and law around taxation, finance, health, defense, infrastructure, commerce, education, housing, immigration, and any number of other societal pillars held near and dear may all be up for grabs leads to one critical vanishing point question.

That is, what is the causation or correlation—if there is any—between Federal policy and those whose business models and livelihoods depend on new single-family, for-sale residential construction? The reason the question matters is the still-lingering thought that if the election had had the other result, structural Federal policy around all of those societal pillars would essentially have stayed intact.

At the same time, real estate and home building is ever dynamic, so one assumes that if there were fundamental continuity in policy—rather than the promised discontinuity—we would have been looking at essentially uninterrupted trajectories, outlooks, predictions, and projections on job growth, household formations, family formations, interest rates, AD&C lending, mortgage availability, house prices, existing home sales, construction labor capacity, new home sales, mix shift into lower price tiers, new community openings, etc.

Policy, like economic forces themselves, provides a context for your business model, large or small, and context--in the form of constraint, risk, opportunity, competitive environment, collective consumer sentiment, etc. are important.

Not as important, though, as who you are, and who you want to be as a builder. People have not stopped needing homes, nor will they.

Come January 21, 2017 and January 21, 2018, and January 21 of any year you name for the next 10 years, these two realities will be true. The market for new homes for first-time buying young adults priced at close to existing home price averages in work-center magnets will be strong. The market for new homes for anytime-buying older, 55+ adults--homes attainably priced, but full of aspirational features conducive to livability, enjoyment, connectedness, health, and nuanced thriftiness--will also be strong.

These realities are and will be true. Do they add up to certainty for home builders? You tell me. If we had it to do over again, would we choose the likely path of continuity and cohesiveness--with its grudging, weak-pulsed slog upward--or what we have now, the unknown? The new? A future that perhaps differs profoundly from our tired expectations? You tell me.