The Pacific Coast Builders Conference, going on in San Diego, feels like the small town of industry trade shows. At every turn, it's someone you know, often for a decade or more. It's home building's small world and short life.
The tenor and tone of PCBC, positioned as it is mid-year, is a reality check moment for the year, something seldom evident in the vibe of promises, intention and heady expectations in January's events.
What's clear here, from both the agenda program sessions, the trade show floor, the corridor talk, the parties and the after-parties is that 2017 is a good year for home builders, and 2018 will likely be more of the same.
When more people want and are willing to stretch elastically to buy what it is you produce than you have capacity to make, home building, development, architectural design, landscape design, interiors, etc. feel like a purpose-filled livelihood.
One top 10 public home building company ceo we wound up sitting next to for lunch was thrilled that he'd gotten to spend time on the exhibition floor for the first time in several years, and remarked particularly on some of the space-saving innovative appliances he was seeing.
A few notes from our visits and conversations with people amount to the take-aways we'll continue to pursue.
- Lots--the need for them, the cost of them, and the risk of having too much leverage on too many of them at the wrong part of the current cycle--trump just about any of the issues we hear people discussing.
- Labor--the need for it, the cost of it, and the risk to construction cycle times and impact on margins and or customer experience--is a fluid, slippery issue, especially in a moment when builders are able to raise prices with each release or phase. It's background noise that only surfaces as a point of focus when deliveries are imperiled.
- Capital--the need for it, the cost of it, and the risk of long-term debt investment on short term assets--is gettable, but not likely on forward projections that look like hockey sticks.
Developers and builders and their partners face two very big challenges, especially now, in times that are not necessarily great like they might be, but are as good as they are.
- One challenge is that the time, focus, resources, and efforts it takes to meet current demand from current would-be customers, amounting to meeting current needs is huge. It dominates the attention. But it also obscures an equally material and relevant issue, which is the question who's missing from from the current universe of would-be and prospective buyers and why. Housing's unmet need--people un- or underserved by our communities, products, capital resources, etc. is the shape and the force of potential resistence to the business ecosytem's current success.
- Too, equally important is that locking in to serving what customers say they want today potentially blocks builders, developers, and designers from learning what customers will say they want beyond tomorrow. Successful firms fail when they listen too hard to today's customers and neglect what they need to learn about customers around the next corner.
What's heartening, especially in light of these two "Gorillas in the Room" is how, in good times, builders use the words "love," and "passion," and "energy" in sentences that describe their work, and their projects, and their experience of both the associates, the partners, and the customers of the neighborhoods they build. They're quicker these days to admit they don't have all the answers--(although they're pretty proud of the answers they've come up with for the problems they can see in front of their faces)--and they acknowledge that it's probably going to take working more closely and with more trust with other firms, other parts of the big system of bringing land, manufacturing, marketing, and Dream-making together in one spot of the earth to keep the good times going, and to weather tougher times that surely lay ahead.
