The homebuilding industry was among the hardest hit during the recent recession. For many of them, it was more of a depression.
The speaker at this month’s Arizona Association for Economic Development luncheon was Rick Andreen, president of Shea Homes Trilogy.
Yes – Shea is still in business, as are a number of other well-known names that he mentioned, including Lennar and Meritage. Our former client, Cachet Homes is still around, too.
Andreen said that for the most part – homebuilders do not compete against each other. They compete against the current homes of potential buyers. Builders have had to come up with features, advantages and other amenities that a potential buyer’s current home does not have, such as better energy efficiency and multi-generational living options.
Andreen hit on a few key points:
- Home Sizes – they are likely to return to previous levels as the economy strengthens.
- Growth – the fundamental demand for housing is strong. The only constraint is government regulation on building.
- Consumer Driven Design – builders will continue to adopt designs to consumer needs and desires.
- Lending – the previous lending boom brought with it such a high demand that interest rates climbed to above six percent and lending fraud became its own small industry.
- Financial Regulations – or more accurately, Financial Requirements -- homeowners who could not afford the homes they were purchasing were still able to obtain financing for them. Those individuals, the lenders and the overall economy paid the price for it.
While those in the homebuilding industry have had to adapt to survive, they are not alone. What innovations have you seen in your industry that are a result of the economy?