Bad Industry News Reveals An Interesting Sales Strategy

With increasingly bad economic news citing slower and slower housing starts, growing unemployment rates, falling consumer confidence numbers and fears about another round of bank and finance company defaults, an interesting strategy is being revealed that many competitive and innovative homebuilders and developers may want to consider.

Nancy Keates of The Wall Street Journal recently reported on her experience in building a new home while making some interesting observations that are a result of the woes of the economy in general and homebuilding industry specifically.

While the article begins by playing on buyers’ perceptions that it is currently cheaper to buy an existing home than construct a new one, for those consumers that conclude a home built to their specifications is superior to one that they might settle on based on cost, there hasn’t been a better time to build new than now.

For instance, while the cost of building a new home in 2007 rose 2.4% from the year prior, this was over 60% less than the increase in costs from 2005 to 2006. In fact, when the housing slump ends, it is likely we’ll see a return to higher construction costs, making today’s rates look even more attractive.

And while housing starts continue to drop (to a seasonally adjusted, annual rate of just 975,000 nationwide according to a Commerce Department report published in mod-June, the increasing unemployment rate brings one bright spot — there are now more contractors, project managers and laborers available than ever before. The result? Your new home is likely to get more attention than before and even be completed ahead of schedule. Look for this benefit to end once housing starts heat up and the demand for skilled labor increases.

And finally, the costs of many building components — from lumber to finished goods — are feeling the pinch of the stressed economy as well. Weekly price reports on wood products has recently shown falling prices compared to previous years and many contractors are feeling increasingly confident they can negotiate better deals on your behalf due to excess inventory and supplier’s struggling for any extra sale. When the housing market comes around again, don’t bet this will be the case.

So, what’s a stressed and perhaps nervous homebuilder or developer to do with this information? Well, take a lesson from experienced investors — when prices are plummeting, there are more opportunities than ever before. Take this same tact when working with your buyers. Explain to them the advantages of planning and building a home that perfectly matches their needs and desires — but also include things like the added attention they’ll now receive, the prospect of accelerated delivery schedules and even that you now have access to lower-cost supplies, labor and other hard goods associated with the building of their new home.

There’s a silver lining to every story — as they say in public relations, there’s no such thing as “bad PR” — it’s all in how you deliver it.