HOW WILL THE PHBCA KNOW IT HAS SUCCEEDED? THE FINISH LINE IS DISTANT, BUT A FEW MARKERS ALONG THE WAY, ACCORDING TO FLEISHMAN HILLARD'S RICHARD ANDERSON, INCLUDE:

  • More balanced coverage of publicly traded builders as a distinct sector. “The first message is that the largest home builders have created a powerful new segment within the $250 billion housing industry,” says Anderson. They should be analyzed separately from home building as a whole, since they operate distinctly from smaller builders. Aggregated financial data from the members of the PHBCA will be routinely presented, distinct from home building statistics generally.
  • Acknowledgement that big builders contribute to the economy as a whole. These companies are the second or third largest customers of appliance and carpet manufacturers, among many suppliers; they buy in advance, locking in favorable terms but also provide manufacturers with planned production. “If these builders didn't exist, there would be cutbacks and shrinkage in these particular industries,” says Anderson.
  • A higher stock valuation. “We don't expect that in 12 or even 18 months we'll be able to say that these companies selling at an average of nine times trailing earnings [today will be] selling at 16 times trailing earnings,” Anderson concedes. “We're educating the people who educate the people who make investment decisions.” But if the campaign does a good job at helping investors understand what's driving the big builders, they should better value the financial and management strength of big builders.
  • Press coverage acknowledging that the national builders benefit local economies. Real estate is local, and the local media should report on the construction and other industry jobs that big builders create. “A California study revealed that for every dollar spent on home construction, eight dollars are generated in the local economy. If we can generate interesting statistical information in local stories, that will be a sign of success,” says Anderson.

    • Learn more about markets featured in this article: Anderson, IN.